Tilray, Inc.'s (NASDAQ:TLRY): Tilray, Inc. engages in the research, cultivation, processing, and distribution of medical cannabis. The US$869m market-cap posted a loss in its most recent financial year of -US$321.2m and a latest trailing-twelve-month loss of -US$475.9m leading to an even wider gap between loss and breakeven. As path to profitability is the topic on TLRY’s investors mind, I’ve decided to gauge market sentiment. Below I will provide a high-level summary of the industry analysts’ expectations for TLRY.
TLRY is bordering on breakeven, according to the 15 Pharmaceuticals analysts. They expect the company to post a final loss in 2021, before turning a profit of US$13m in 2022. Therefore, TLRY is expected to breakeven roughly 2 years from now. In order to meet this breakeven date, I calculated the rate at which TLRY must grow year-on-year. It turns out an average annual growth rate of 84% is expected, which signals high confidence from analysts. If this rate turns out to be too aggressive, TLRY may become profitable much later than analysts predict.
Given this is a high-level overview, I won’t go into details of TLRY’s upcoming projects, though, take into account that typically a pharma company has lumpy cash flows which are contingent on the drug and stage of product development the business is in. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
One thing I would like to bring into light with TLRY is its debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, which in TLRY’s case, it has significantly overshot. Note that a higher debt obligation increases the risk around investing in the loss-making company.
This article is not intended to be a comprehensive analysis on TLRY, so if you are interested in understanding the company at a deeper level, take a look at TLRY’s company page on Simply Wall St. I’ve also put together a list of essential factors you should further examine:
- Valuation: What is TLRY 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 TLRY 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 Tilray’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.
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. 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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