IRIDEX Corporation's (NASDAQ:IRIX): IRIDEX Corporation, an ophthalmic medical technology company, provides therapeutic based laser systems, delivery devices, and consumable instrumentation to treat sight-threatening eye diseases in ophthalmology. The US$34m market-cap posted a loss in its most recent financial year of -US$12.8m and a latest trailing-twelve-month loss of -US$10.1m shrinking the gap between loss and breakeven. Many investors are wondering the rate at which IRIX 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 IRIX.
IRIX is bordering on breakeven, according to the 2 Medical Equipment analysts. They expect the company to post a final loss in 2021, before turning a profit of US$2.0m in 2022. Therefore, IRIX is expected to breakeven roughly 3 years from now. What rate will IRIX 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 57%, which is extremely buoyant. If this rate turns out to be too aggressive, IRIX may become profitable much later than analysts predict.
I’m not going to go through company-specific developments for IRIX given that this is a high-level summary, however, keep in mind that typically a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
One thing I’d like to point out is that IRIX has no debt on its balance sheet, which is quite unusual for a cash-burning loss-making, growth company, which typically has high debt relative to its equity. IRIX currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.
This article is not intended to be a comprehensive analysis on IRIX, so if you are interested in understanding the company at a deeper level, take a look at IRIX’s company page on Simply Wall St. I’ve also put together a list of pertinent aspects you should look at:
- Historical Track Record: What has IRIX'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 IRIDEX’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.
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