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Chembio Diagnostics, Inc.’s (NASDAQ:CEMI) Path To Profitability

Peter Morris

Chembio Diagnostics, Inc.’s (NASDAQ:CEMI): Chembio Diagnostics, Inc., together with its subsidiaries, develops, manufactures, and commercializes point-of-care (POC) diagnostic tests that are used to detect or monitor diseases. With the latest financial year loss of -US$6.4m and a trailing-twelve month of -US$6.7m, the US$93m market-cap amplifies its loss by moving further away from its breakeven target. Many investors are wondering the rate at which CEMI will turn a profit, with the big question being “when will the company breakeven?” Below I will provide a high-level summary of the industry analysts’ expectations for CEMI.

See our latest analysis for Chembio Diagnostics

According to the 4 industry analysts covering CEMI, the consensus is breakeven is near. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$1.2m in 2021. Therefore, CEMI is expected to breakeven roughly 2 years from today. How fast will CEMI have to grow each year in order to reach the breakeven point by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 69% year-on-year, on average, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

NasdaqCM:CEMI Past Future Earnings January 1st 19

Given this is a high-level overview, I won’t go into details of CEMI’s upcoming projects, however, bear in mind that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

Before I wrap up, there’s one aspect worth mentioning. CEMI has managed its capital judiciously, with debt making up 2.1% of equity. This means that CEMI 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:

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

  1. Historical Track Record: What has CEMI’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.
  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Chembio Diagnostics’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.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.