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When Will TransMedics Group, Inc. (NASDAQ:TMDX) Turn A Profit?

Simply Wall St

TransMedics Group, Inc.'s (NASDAQ:TMDX): Transmedics Group, Inc., a commercial-stage medical technology company, engages in transforming organ transplant therapy for end-stage organ failure patients across multiple disease states. With the latest financial year loss of -US$23.8m and a trailing-twelve month of -US$28.8m, the US$507m market-cap amplifies its loss by moving further away from its breakeven target. As path to profitability is the topic on TMDX’s investors mind, I’ve decided to gauge market sentiment. In this article, I will touch on the expectations for TMDX’s growth and when analysts expect the company to become profitable.

Check out our latest analysis for TransMedics Group

Consensus from the 4 Medical Equipment analysts is TMDX is on the verge of breakeven. They expect the company to post a final loss in 2021, before turning a profit of US$18m in 2022. Therefore, TMDX is expected to breakeven roughly 3 years from today. How fast will TMDX have to grow each year in order to reach the breakeven point by 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 68% year-on-year, on average, which is rather optimistic! If this rate turns out to be too aggressive, TMDX may become profitable much later than analysts predict.

NasdaqGM:TMDX Past and Future Earnings, September 17th 2019

I’m not going to go through company-specific developments for TMDX given that this is a high-level summary, though, keep in mind that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

One thing I would like to bring into light with TMDX is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in TMDX’s case is 48%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

There are too many aspects of TMDX to cover in one brief article, but the key fundamentals for the company can all be found in one place – TMDX’s company page on Simply Wall St. I’ve also compiled a list of important aspects you should further examine:

  1. Valuation: What is TMDX 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 TMDX is currently mispriced by the market.
  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on TransMedics Group’s board and the CEO’s back ground.
  3. 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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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. Thank you for reading.