When Will Verona Pharma plc (NASDAQ:VRNA) Turn A Profit?
Verona Pharma plc (NASDAQ:VRNA) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Verona Pharma plc, a clinical stage biopharmaceutical company, focuses on development and commercialization of therapies for the treatment of respiratory diseases with unmet medical needs. The US$1.3b market-cap company posted a loss in its most recent financial year of US$69m and a latest trailing-twelve-month loss of US$51m shrinking the gap between loss and breakeven. As path to profitability is the topic on Verona Pharma's investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
See our latest analysis for Verona Pharma
According to the 7 industry analysts covering Verona Pharma, the consensus is that breakeven is near. They expect the company to post a final loss in 2025, before turning a profit of US$122m in 2026. Therefore, the company is expected to breakeven roughly 2 years from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 60% is expected, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Given this is a high-level overview, we won’t go into details of Verona Pharma's upcoming projects, however, bear in mind that by and large pharmaceuticals, depending on the stage of product development, have irregular periods of cash flow. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
One thing we’d like to point out is that The company has managed its capital prudently, with debt making up 7.6% 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:
This article is not intended to be a comprehensive analysis on Verona Pharma, so if you are interested in understanding the company at a deeper level, take a look at Verona Pharma's company page on Simply Wall St. We've also compiled a list of essential aspects you should look at:
Historical Track Record: What has Verona Pharma's performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Verona Pharma'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.
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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.
