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Biomerica, Inc.'s (NASDAQ:BMRA) Path To Profitability

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Biomerica, Inc.'s (NASDAQ:BMRA): Biomerica, Inc., together with its subsidiaries, develops, manufactures, and markets medical diagnostic products for the early detection and monitoring of chronic diseases and medical conditions. With the latest financial year loss of -US$2.4m and a trailing-twelve month of -US$2.5m, the US$69m market-cap amplifies its loss by moving further away from its breakeven target. The most pressing concern for investors is BMRA’s path to profitability – when will it breakeven? I’ve put together a brief outline of industry analyst expectations for BMRA, its year of breakeven and its implied growth rate.

See our latest analysis for Biomerica

Consensus from the 2 Medical Equipment analysts is BMRA is on the verge of breakeven. They anticipate the company to incur a final loss in 2021, before generating positive profits of US$2.9m in 2022. BMRA is therefore projected to breakeven around 2 years from today. How fast will BMRA have to grow each year in order to reach the breakeven point by 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 42% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, BMRA may become profitable much later than analysts predict.

NasdaqCM:BMRA Past and Future Earnings March 30th 2020
NasdaqCM:BMRA Past and Future Earnings March 30th 2020

I’m not going to go through company-specific developments for BMRA given that this is a high-level summary, but, keep in mind that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

One thing I’d like to point out is that BMRA has no debt on its balance sheet, which is rare for a loss-making loss-making, growth company, which usually has a high level of debt relative to its equity. This means that BMRA has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on BMRA, so if you are interested in understanding the company at a deeper level, take a look at BMRA’s company page on Simply Wall St. I’ve also compiled a list of essential aspects you should further research:

  1. Valuation: What is BMRA 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 BMRA is currently mispriced by the market.

  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Biomerica’s board and the CEO’s back ground.

  3. 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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.