Market Sentiment Around Loss-Making Atomo Diagnostics Limited (ASX:AT1)

Atomo Diagnostics Limited (ASX:AT1) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Atomo Diagnostics Limited researches, designs, develops, manufactures, and sells medical devices for blood-based rapid testing for professional use and self-testing. With the latest financial year loss of AU$9.2m and a trailing-twelve-month loss of AU$9.5m, the AU$139m market-cap company amplified its loss by moving further away from its breakeven target. Many investors are wondering about the rate at which Atomo Diagnostics will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

Check out our latest analysis for Atomo Diagnostics

Atomo Diagnostics is bordering on breakeven, according to some Australian Medical Equipment analysts. They expect the company to post a final loss in 2021, before turning a profit of AU$13m in 2022. So, the company is predicted to breakeven just over a year from now. How fast will the company 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 110% 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 Atomo Diagnostics' growth isn’t the focus of this broad overview, but, 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 we’d like to point out is that Atomo Diagnostics has no debt on its balance sheet, which is quite unusual for a cash-burning growth company, 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:

This article is not intended to be a comprehensive analysis on Atomo Diagnostics, so if you are interested in understanding the company at a deeper level, take a look at Atomo Diagnostics' company page on Simply Wall St. We've also put together a list of pertinent factors you should further research:

1. Valuation: What is Atomo Diagnostics 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 Atomo Diagnostics 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 Atomo Diagnostics’s board and the CEO’s background.
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.

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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.
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