Vectura Group plc (LON:VEC): When Will It Breakeven?
Vectura Group plc's (LON:VEC): Vectura Group plc engages in the design, development, and supply of pharmaceutical products for the treatment of airways-related diseases worldwide. The UK£524m market-cap company announced a latest loss of -UK£88.2m on 31 December 2018 for its most recent financial year result. The most pressing concern for investors is VEC’s path to profitability – when will it breakeven? Below I will provide a high-level summary of the industry analysts’ expectations for VEC.
View our latest analysis for Vectura Group
VEC is bordering on breakeven, according to the 8 Pharmaceuticals analysts. They expect the company to post a final loss in 2020, before turning a profit of UK£9.5m in 2021. VEC is therefore projected to breakeven around 2 years from now. In order to meet this breakeven date, I calculated the rate at which VEC must grow year-on-year. It turns out an average annual growth rate of 69% is expected, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.
Underlying developments driving VEC’s growth isn’t the focus of this broad overview, though, keep in mind that generally a pharma company has lumpy cash flows which are contingent on the drug and stage of product development the business is in. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.
One thing I’d like to point out is that VEC has managed its capital prudently, with debt making up 0.8% of equity. This means that VEC 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 key fundamentals of VEC which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at VEC, take a look at VEC’s company page on Simply Wall St. I’ve also put together a list of pertinent factors you should further examine:
Valuation: What is VEC 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 VEC 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 Vectura Group’s board and the CEO’s back ground.
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.
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If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
