Analysts Expect PolyNovo Limited (ASX:PNV) To Breakeven Soon

With the business potentially at an important milestone, we thought we'd take a closer look at PolyNovo Limited's (ASX:PNV) future prospects. PolyNovo Limited develops medical devices in the United States, Australia, New Zealand, the United Kingdom, Ireland, Singapore, and internationally. On 30 June 2023, the AU$814m market-cap company posted a loss of AU$4.9m for its most recent financial year. Many investors are wondering about the rate at which PolyNovo 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.

See our latest analysis for PolyNovo

Consensus from 8 of the Australian Medical Equipment analysts is that PolyNovo is on the verge of breakeven. They expect the company to post a final loss in 2023, before turning a profit of AU$152k in 2024. The company is therefore projected to breakeven around a year from now or less! How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2024? Working backwards from analyst estimates, it turns out that they expect the company to grow 54% year-on-year, on average, which is extremely buoyant. 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 PolyNovo 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.

Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital judiciously, with debt making up 4.9% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of PolyNovo 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 PolyNovo, take a look at PolyNovo's company page on Simply Wall St. We've also put together a list of important factors you should further examine:

1. Valuation: What is PolyNovo 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 PolyNovo 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 PolyNovo’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. 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.