When Can We Expect A Profit From Spectral Medical Inc. (TSE:EDT)?
We feel now is a pretty good time to analyse Spectral Medical Inc.'s (TSE:EDT) business as it appears the company may be on the cusp of a considerable accomplishment. Spectral Medical Inc., together with its subsidiaries, focuses on the development and commercialization of products for the treatment of septic shock and renal disease in North America. The company’s loss has recently broadened since it announced a CA$8.8m loss in the full financial year, compared to the latest trailing-twelve-month loss of CA$11m, moving it further away from breakeven. Many investors are wondering about the rate at which Spectral Medical will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.
See our latest analysis for Spectral Medical
According to some industry analysts covering Spectral Medical, breakeven is near. They expect the company to post a final loss in 2023, before turning a profit of CA$400k in 2024. The company is therefore projected to breakeven around 2 years from now. 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 89%, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Underlying developments driving Spectral Medical's growth isn’t the focus of this broad overview, though, bear in mind that by and large a biotech has lumpy cash flows which are contingent on the product type and stage of development the company is in. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.
Before we wrap up, there’s one issue worth mentioning. Spectral Medical currently has negative equity on its balance sheet. Accounting methods used to deal with losses accumulated over time can cause this to occur. This is because liabilities are carried forward into the future until it cancels. These losses tend to occur only on paper, however, in other cases it can be forewarning.
Next Steps:
There are too many aspects of Spectral Medical to cover in one brief article, but the key fundamentals for the company can all be found in one place – Spectral Medical's company page on Simply Wall St. We've also put together a list of important aspects you should further research:
Historical Track Record: What has Spectral Medical'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 Spectral Medical'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.
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.
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