NovoCure Limited (NASDAQ:NVCR): Is Breakeven Near?
NovoCure Limited’s (NASDAQ:NVCR): NovoCure Limited engages in the development, manufacture, and commercialization of Tumor Treating Fields for the treatment of solid tumors. The US$2.9b market-cap company’s loss lessens since it announced a -US$62m bottom-line in the full financial year, compared to the latest trailing-twelve-month loss of -US$59m, as it approaches breakeven. Many investors are wondering the rate at which NVCR 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 NVCR.
View our latest analysis for NovoCure
NVCR is bordering on breakeven, according to Medical Equipment analysts. They expect the company to post a final loss in 2018, before turning a profit of US$15m in 2019. So, NVCR is predicted to breakeven approximately a few months from now. What rate will NVCR 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 76%, which signals high confidence from analysts. If this rate turns out to be too aggressive, NVCR may become profitable much later than analysts predict.
Given this is a high-level overview, I won’t go into details of NVCR’s upcoming projects, 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 would like to bring into light with NVCR is its debt-to-equity ratio of 130%. Typically, debt shouldn’t exceed 40% of your equity, which in NVCR’s case, it has significantly overshot. Note that a higher debt obligation increases the risk in investing in the loss-making company.
Next Steps:
There are too many aspects of NVCR to cover in one brief article, but the key fundamentals for the company can all be found in one place – NVCR’s company page on Simply Wall St. I’ve also put together a list of pertinent factors you should further research:
Valuation: What is NVCR worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether NVCR is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on NovoCure’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.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
