GenMark Diagnostics, Inc. (NASDAQ:GNMK) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. GenMark Diagnostics, Inc., a molecular diagnostics company, develops and commercializes molecular panels based on its proprietary eSensor electrochemical detection technology. The US$817m market-cap company posted a loss in its most recent financial year of US$47.4m and a latest trailing-twelve-month loss of US$33.7m shrinking the gap between loss and breakeven. As path to profitability is the topic on GenMark Diagnostics' investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.
GenMark Diagnostics is bordering on breakeven, according to the 7 American Medical Equipment analysts. They expect the company to post a final loss in 2021, before turning a profit of US$4.9m in 2022. Therefore, the company is expected to breakeven roughly 2 years from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 65%, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.
We're not going to go through company-specific developments for GenMark Diagnostics given that this is a high-level summary, though, take into account that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
Before we wrap up, there’s one issue worth mentioning. GenMark Diagnostics currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in GenMark Diagnostics' case is 78%. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.
This article is not intended to be a comprehensive analysis on GenMark Diagnostics, so if you are interested in understanding the company at a deeper level, take a look at GenMark Diagnostics' company page on Simply Wall St. We've also compiled a list of pertinent factors you should look at:
- Valuation: What is GenMark Diagnostics 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 GenMark Diagnostics is currently mispriced by the market.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on GenMark Diagnostics’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.
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. 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.
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