Market Sentiment Around Loss-Making BCAL Diagnostics Limited (ASX:BDX)

We feel now is a pretty good time to analyse BCAL Diagnostics Limited's (ASX:BDX) business as it appears the company may be on the cusp of a considerable accomplishment. BCAL Diagnostics Limited, a screening and diagnostic company, engages in developing a non-invasive blood test for the detection of breast cancer. On 30 June 2024, the AU$39m market-cap company posted a loss of AU$6.4m for its most recent financial year. Many investors are wondering about the rate at which BCAL Diagnostics will turn a profit, with the big question being “when will the company 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 BCAL Diagnostics

According to some industry analysts covering BCAL Diagnostics, breakeven is near. They anticipate the company to incur a final loss in 2025, before generating positive profits of AU$3.8m in 2026. Therefore, the company is expected to breakeven roughly 2 years from now. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 91%, 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 BCAL Diagnostics given that this is a high-level summary, though, keep in mind that typically a biotech has lumpy cash flows which are contingent on the product type and stage of development the company is in. So, 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 The company has managed its capital judiciously, with debt making up 7.5% 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 too many aspects of BCAL Diagnostics to cover in one brief article, but the key fundamentals for the company can all be found in one place – BCAL Diagnostics' company page on Simply Wall St. We've also put together a list of important factors you should look at:

1. Valuation: What is BCAL 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 BCAL 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 BCAL 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. 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.