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iCAD, Inc.'s (NASDAQ:ICAD): iCAD, Inc. provides image analysis, workflow solutions, and radiation therapy for the early identification and treatment of cancer in the United States and internationally. On 31 December 2018, the US$92m market-cap posted a loss of -US$9.0m for its most recent financial year. The most pressing concern for investors is ICAD’s path to profitability – when will it breakeven? Below I will provide a high-level summary of the industry analysts’ expectations for ICAD.
According to the 3 industry analysts covering ICAD, the consensus is breakeven is near. They anticipate the company to incur a final loss in 2019, before generating positive profits of US$615k in 2020. ICAD is therefore projected to breakeven around a few months from now. What rate will ICAD have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 94%, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.
I’m not going to go through company-specific developments for ICAD given that this is a high-level summary, though, keep in mind that typically a healthcare tech company has lumpy cash flows which are contingent on the product and stage of development the company 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 ICAD is its debt-to-equity ratio of 190%. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in ICAD’s case, it has significantly overshot. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.
This article is not intended to be a comprehensive analysis on ICAD, so if you are interested in understanding the company at a deeper level, take a look at ICAD’s company page on Simply Wall St. I’ve also compiled a list of essential factors you should look at:
- Historical Track Record: What has ICAD'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 iCAD’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 firstname.lastname@example.org. 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.