Spectral Medical Inc. (TSE:EDT) Is Expected To Breakeven In The Near Future
We feel now is a pretty good time to analyse Spectral Medical Inc.'s (TSE:EDT) business as it appears the company may be on the cusp of a considerable accomplishment. Spectral Medical Inc. focuses on the development and commercialization of treatment for septic shock in North America. With the latest financial year loss of CA$4.9m and a trailing-twelve-month loss of CA$8.4m, the CA$152m market-cap company amplified its loss by moving further away from its breakeven target. The most pressing concern for investors is Spectral Medical's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.
View our latest analysis for Spectral Medical
Expectations from some of the Canadian Biotechs analysts is that Spectral Medical is on the verge of breakeven. They anticipate the company to incur a final loss in 2022, before generating positive profits of CA$52m in 2023. So, the company is predicted to breakeven approximately 2 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 63% 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.
Underlying developments driving Spectral Medical's growth isn’t the focus of this broad overview, though, keep in mind that typically biotechs, depending on the stage of product development, have irregular periods of cash flow. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.
One thing we’d like to point out is that Spectral Medical has no debt on its balance sheet, which is rare for a loss-making biotech, which usually has a high level of debt relative to its equity. The company 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 too many aspects of Spectral Medical to cover in one brief article, but the key fundamentals for the company can all be found in one place – Spectral Medical's company page on Simply Wall St. We've also compiled a list of essential aspects you should look at:
Historical Track Record: What has Spectral Medical'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 Spectral Medical's 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.
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. 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
