Sequans Communications SA’s (NYSE:SQNS): Sequans Communications S.A., together with its subsidiaries, engages in fabless designing, developing, and supplying 4G LTE semiconductor solutions for wireless broadband and Internet of Things applications. The US$190.80m market-cap posted a loss in its most recent financial year of -US$26.16m and a latest trailing-twelve-month loss of -US$29.30m leading to an even wider gap between loss and breakeven. As path to profitability is the topic on SQNS’s investors mind, I’ve decided to gauge market sentiment. I’ve put together a brief outline of industry analyst expectations for SQNS, its year of breakeven and its implied growth rate.
Expectation from Semiconductor analysts is SQNS is on the verge of breakeven. They anticipate the company to incur a final loss in -1, before generating positive profits of US$0 in . So, SQNS is predicted to breakeven approximately a couple of months from now! In order to meet this breakeven date, I calculated the rate at which SQNS must grow year-on-year. It turns out an average annual growth rate of 50.88% is expected, which signals high confidence from analysts. If this rate turns out to be too aggressive, SQNS may become profitable much later than analysts predict.
Given this is a high-level overview, I won’t go into details of SQNS’s upcoming projects, however, bear in mind 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 issue worth mentioning. SQNS currently has a debt-to-equity ratio of 140.22%. Typically, debt shouldn’t exceed 40% of your equity, and SQNS 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.
There are too many aspects of SQNS to cover in one brief article, but the key fundamentals for the company can all be found in one place – SQNS’s company page on Simply Wall St. I’ve also put together a list of important aspects you should look at:
- Historical Track Record: What has SQNS’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 Sequans Communications’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 pass 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.