Analysts Expect Breakeven For Novonix Limited (ASX:NVX) Before Long
With the business potentially at an important milestone, we thought we'd take a closer look at Novonix Limited's (ASX:NVX) future prospects. Novonix Limited develops and supplies battery materials, equipment, and services to the lithium-ion battery market in North America. The AU$2.5b market-cap company posted a loss in its most recent financial year of AU$18m and a latest trailing-twelve-month loss of AU$36m leading to an even wider gap between loss and breakeven. As path to profitability is the topic on Novonix's investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
See our latest analysis for Novonix
According to the 2 industry analysts covering Novonix, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2023, before generating positive profits of AU$4.2m in 2024. Therefore, the company is expected to breakeven roughly 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 72% is expected, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
We're not going to go through company-specific developments for Novonix given that this is a high-level summary, though, keep in mind that typically 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 judiciously, with debt making up 13% 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 too many aspects of Novonix to cover in one brief article, but the key fundamentals for the company can all be found in one place – Novonix's company page on Simply Wall St. We've also put together a list of essential factors you should further examine:
Historical Track Record: What has Novonix'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 Novonix'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.
