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Breakeven On The Horizon For Aroa Biosurgery Limited (ASX:ARX)

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Aroa Biosurgery Limited (ASX:ARX) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Aroa Biosurgery Limited, a regenerative medicine company, engages in the developing, manufacturing, and distributing medical devices for wound and tissue repair using extracellular matrix (ECM) technology in the United States and internationally. On 31 March 2022, the AU$224m market-cap company posted a loss of NZ$8.4m for its most recent financial year. As path to profitability is the topic on Aroa Biosurgery's investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

See our latest analysis for Aroa Biosurgery

According to the 5 industry analysts covering Aroa Biosurgery, the consensus is that breakeven is near. They expect the company to post a final loss in 2024, before turning a profit of NZ$8.4m in 2025. The company is therefore projected to breakeven around 3 years from now. 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 88% is expected, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings-per-share-growth
earnings-per-share-growth

Given this is a high-level overview, we won’t go into details of Aroa Biosurgery's upcoming projects, however, take into account that typically biotechs, depending on the stage of product development, have irregular periods of cash flow. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.

One thing we’d like to point out is that Aroa Biosurgery has no debt on its balance sheet, which is rare for a loss-making biotech, which typically has high debt relative to its equity. The company 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 Aroa Biosurgery 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 Aroa Biosurgery, take a look at Aroa Biosurgery's company page on Simply Wall St. We've also put together a list of key aspects you should further examine:

  1. Valuation: What is Aroa Biosurgery 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 Aroa Biosurgery 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 Aroa Biosurgery’s board and the CEO’s background.

  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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.