Ellex Medical Lasers Limited's (ASX:ELX) Profit Outlook
Ellex Medical Lasers Limited's (ASX:ELX): Ellex Medical Lasers Limited designs, manufactures, distributes, and sells lasers and ultrasound systems for ophthalmologists to diagnose and treat eye diseases. The AU$114m market-cap company announced a latest loss of -AU$5.8m on 30 June 2019 for its most recent financial year result. The most pressing concern for investors is ELX’s path to profitability – when will it breakeven? I’ve put together a brief outline of industry analyst expectations for ELX, its year of breakeven and its implied growth rate.
Check out our latest analysis for Ellex Medical Lasers
Consensus from the 2 Medical Equipment analysts is ELX is on the verge of breakeven. They expect the company to post a final loss in 2021, before turning a profit of AU$2.9m in 2022. So, ELX is predicted to breakeven approximately 2 years from now. What rate will ELX have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 77%, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Given this is a high-level overview, I won’t go into details of ELX’s upcoming projects, however, take into account that generally 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 ELX has managed its capital prudently, with debt making up 22% of equity. This means that ELX 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 ELX, so if you are interested in understanding the company at a deeper level, take a look at ELX’s company page on Simply Wall St. I’ve also put together a list of pertinent factors you should look at:
Historical Track Record: What has ELX'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 Ellex Medical Lasers’s board and the CEO’s back ground.
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.
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