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Silk Road Medical, Inc's (NASDAQ:SILK): Silk Road Medical, Inc. operates as a medical device company in the United States. The company’s loss has recently broadened since it announced a -US$37.6m loss in the full financial year, compared to the latest trailing-twelve-month loss of -US$59.7m, moving it further away from breakeven. As path to profitability is the topic on SILK’s investors mind, I’ve decided to gauge market sentiment. In this article, I will touch on the expectations for SILK’s growth and when analysts expect the company to become profitable.
Consensus from the 3 Medical Equipment analysts is SILK is on the verge of breakeven. They expect the company to post a final loss in 2021, before turning a profit of US$20m in 2022. So, SILK is predicted to breakeven approximately 2 years from now. What rate will SILK 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 68%, which signals high confidence from analysts. If this rate turns out to be too aggressive, SILK may become profitable much later than analysts predict.
Given this is a high-level overview, I won’t go into details of SILK’s upcoming projects, however, bear in mind that typically 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. SILK currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in SILK’s case is 58%. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.
This article is not intended to be a comprehensive analysis on SILK, so if you are interested in understanding the company at a deeper level, take a look at SILK’s company page on Simply Wall St. I’ve also compiled a list of pertinent aspects you should further research:
Valuation: What is SILK 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 SILK 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 Silk Road Medical’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 email@example.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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