Avicanna Inc. (TSE:AVCN) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Avicanna Inc., a commercial-stage and international biopharmaceutical company, focuses on the development, advancement, and commercialization of evidence-based cannabinoid-based products for worldwide consumers and for medical and pharmaceutical market segments. The CA$20m market-cap company announced a latest loss of CA$17m on 31 December 2021 for its most recent financial year result. The most pressing concern for investors is Avicanna's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.
Check out our latest analysis for Avicanna
According to some industry analysts covering Avicanna, breakeven is near. They anticipate the company to incur a final loss in 2023, before generating positive profits of CA$700k in 2024. So, the company is predicted to breakeven approximately 2 years from today. 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 78% is expected, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.
Given this is a high-level overview, we won’t go into details of Avicanna's upcoming projects, however, take into account that generally 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.
Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital prudently, with debt making up 22% 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 key fundamentals of Avicanna which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Avicanna, take a look at Avicanna's company page on Simply Wall St. We've also put together a list of important factors you should look at:
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Valuation: What is Avicanna 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 Avicanna is currently mispriced by the market.
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Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Avicanna’s board and the CEO’s background.
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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.