Yahoo Finance MGC Pharmaceuticals Limited's (ASX:MXC) Profit Outlook
MGC Pharmaceuticals Limited's (ASX:MXC): MGC Pharmaceuticals Limited, a biopharmaceutical company, produces and supplies phytocannabinoid derived medicines in Australia, Slovenia, and other European countries. On 30 June 2019, the AU$45m market-cap posted a loss of -AU$1.9m for its most recent financial year. Many investors are wondering the rate at which MXC will turn a profit, with the big question being “when will the company breakeven?” In this article, I will touch on the expectations for MXC’s growth and when analysts expect the company to become profitable.
Check out our latest analysis for MGC Pharmaceuticals
According to the 2 industry analysts covering MXC, the consensus is breakeven is near. They expect the company to post a final loss in 2020, before turning a profit of AU$1.8m in 2021. MXC is therefore projected to breakeven around 2 years from today. How fast will MXC have to grow each year in order to reach the breakeven point by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 70% year-on-year, on average, which is rather optimistic! If this rate turns out to be too aggressive, MXC may become profitable much later than analysts predict.
Underlying developments driving MXC’s growth isn’t the focus of this broad overview, though, bear 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. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
One thing I’d like to point out is that MXC has no debt on its balance sheet, which is rare for a loss-making pharma, which typically has high debt relative to its equity. MXC currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.
Next Steps:
There are key fundamentals of MXC 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 MXC, take a look at MXC’s company page on Simply Wall St. I’ve also put together a list of pertinent factors you should further research:
Valuation: What is MXC 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 MXC 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 MGC Pharmaceuticals’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.
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.
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