Nova Eye Medical Limited's (ASX:EYE) Shift From Loss To Profit

We feel now is a pretty good time to analyse Nova Eye Medical Limited's (ASX:EYE) business as it appears the company may be on the cusp of a considerable accomplishment. Nova Eye Medical Limited designs, develops, manufactures, markets, and sells surgical devices for the treatment of glaucoma in Australia, the United States, Europe, the Asia Pacific, and internationally. On 30 June 2024, the AU$32m market-cap company posted a loss of AU$8.8m for its most recent financial year. As path to profitability is the topic on Nova Eye Medical's investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

See our latest analysis for Nova Eye Medical

According to the 2 industry analysts covering Nova Eye Medical, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2025, before generating positive profits of AU$1.2m in 2026. The company is therefore projected to breakeven around 2 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2026? Working backwards from analyst estimates, it turns out that they expect the company to grow 102% year-on-year, on average, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

We're not going to go through company-specific developments for Nova Eye Medical given that this is a high-level summary, though, keep in mind that by and large a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing we’d like to point out is that Nova Eye Medical 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. This means that the company has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of Nova Eye Medical which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Nova Eye Medical, take a look at Nova Eye Medical's company page on Simply Wall St. We've also compiled a list of key aspects you should further examine:

1. Valuation: What is Nova Eye Medical 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 Nova Eye Medical 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 Nova Eye Medical’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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.