Loss-Making Sequans Communications S.A. (NYSE:SQNS) Expected To Breakeven In The Medium-Term
Sequans Communications S.A. (NYSE:SQNS) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Sequans Communications S.A. engages in the fabless designing, developing, and supplying of cellular semiconductor solutions for massive and broadband Internet of Things (IoT) markets in Taiwan, Korea, China, rest of Asia, Germany, the United States, and internationally. The US$173m market-cap company posted a loss in its most recent financial year of US$9.0m and a latest trailing-twelve-month loss of US$29m leading to an even wider gap between loss and breakeven. As path to profitability is the topic on Sequans Communications' investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
Check out our latest analysis for Sequans Communications
According to the 2 industry analysts covering Sequans Communications, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2024, before generating positive profits of US$21m in 2025. The company is therefore projected to breakeven around 2 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2025? Working backwards from analyst estimates, it turns out that they expect the company to grow 100% 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.
We're not going to go through company-specific developments for Sequans Communications given that this is a high-level summary, but, take into account that by and large 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. Sequans Communications currently has a debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.
Next Steps:
There are key fundamentals of Sequans Communications which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Sequans Communications, take a look at Sequans Communications' company page on Simply Wall St. We've also put together a list of essential aspects you should further research:
Historical Track Record: What has Sequans Communications' 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 Sequans Communications' 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.
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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.
