Market Sentiment Around Loss-Making ImpediMed Limited (ASX:IPD)
ImpediMed Limited's (ASX:IPD): ImpediMed Limited, together with its subsidiaries, develops, manufactures, and sells bioimpedance spectroscopy devices and software services in Australia, North America, and internationally. The AU$54m market-cap posted a loss in its most recent financial year of -AU$24.0m and a latest trailing-twelve-month loss of -AU$24.8m leading to an even wider gap between loss and breakeven. Many investors are wondering the rate at which IPD will turn a profit, with the big question being “when will the company breakeven?” I’ve put together a brief outline of industry analyst expectations for IPD, its year of breakeven and its implied growth rate.
See our latest analysis for ImpediMed
IPD is bordering on breakeven, according to the 3 Medical Equipment analysts. They expect the company to post a final loss in 2021, before turning a profit of AU$3.3m in 2022. Therefore, IPD is expected to breakeven roughly 2 years from today. What rate will IPD 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 62%, which is extremely buoyant. If this rate turns out to be too aggressive, IPD may become profitable much later than analysts predict.
I’m not going to go through company-specific developments for IPD given that this is a high-level summary, though, 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 I wrap up, there’s one aspect worth mentioning. IPD currently has no debt on its balance sheet, which is rare for a loss-making loss-making, growth company, which typically has high debt relative to its equity. IPD currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.
Next Steps:
There are key fundamentals of IPD which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at IPD, take a look at IPD’s company page on Simply Wall St. I’ve also put together a list of pertinent factors you should further examine:
Historical Track Record: What has IPD'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 ImpediMed’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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