We Might See A Profit From hVIVO plc (LON:HVO) Soon
hVIVO plc (LON:HVO) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. hVIVO plc operates as a pharmaceutical service and contract research company. The company’s loss has recently broadened since it announced a UK£74k loss in the full financial year, compared to the latest trailing-twelve-month loss of UK£1.1m, moving it further away from breakeven. Many investors are wondering about the rate at which hVIVO will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
View our latest analysis for hVIVO
According to the 3 industry analysts covering hVIVO, the consensus is that breakeven is near. They expect the company to post a final loss in 2022, before turning a profit of UK£4.6m in 2023. The company is therefore projected to breakeven around 12 months from now or less. At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 52%, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.
We're not going to go through company-specific developments for hVIVO given that this is a high-level summary, but, take into account that typically a life science company has lumpy cash flows which are contingent on the product and stage of development the company is in. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.
One thing we’d like to point out is that The company has managed its capital judiciously, with debt making up 0.4% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.
Next Steps:
There are too many aspects of hVIVO to cover in one brief article, but the key fundamentals for the company can all be found in one place – hVIVO's company page on Simply Wall St. We've also put together a list of essential factors you should further examine:
Valuation: What is hVIVO worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether hVIVO is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on hVIVO’s board and the CEO’s background.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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