Next Science Limited (ASX:NXS) Is Expected To Breakeven In The Near Future

Next Science Limited (ASX:NXS) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Next Science Limited, a medical technology company, researches, develops, and commercializes technologies to eradicate issues in human health caused by biofilms. The AU$242m market-cap company announced a latest loss of US$12m on 31 December 2020 for its most recent financial year result. The most pressing concern for investors is Next Science's path to profitability – when will it breakeven? In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

Check out our latest analysis for Next Science

According to the 3 industry analysts covering Next Science, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2022, before generating positive profits of US$4.3m in 2023. So, the company is predicted to breakeven approximately 2 years from today. 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 83% 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.

We're not going to go through company-specific developments for Next Science given that this is a high-level summary, but, bear in mind that generally 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 Next Science 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 Next Science 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 Next Science, take a look at Next Science's company page on Simply Wall St. We've also compiled a list of relevant factors you should further examine:

1. Valuation: What is Next Science 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 Next Science 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 Next Science’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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