BrainChip Holdings Limited (ASX:BRN): Are Analysts Optimistic?

BrainChip Holdings Limited's (ASX:BRN): BrainChip Holdings Limited provides software and hardware solutions for artificial intelligence and machine learning applications in North America and Europe. The AU$113.17m market-cap company announced a latest loss of -AU$13.80m on 31 December 2017 for its most recent financial year result. Many investors are wondering the rate at which BRN will turn a profit, with the big question being “when will the company breakeven?” Below I will provide a high-level summary of the industry analysts’ expectations for BRN.

BRN is bordering on breakeven, according to Software analysts. They anticipate the company to incur a final loss in 2018, before generating positive profits of AU$6.70m in 2019. BRN is therefore projected to breakeven around a few months from now. How fast will BRN have to grow each year in order to reach the breakeven point by 2019? Working backwards from analyst estimates, it turns out that they expect the company to grow 56.10% year-on-year, on average, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving BRN’s growth isn’t the focus of this broad overview, but, bear in mind that typically a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before I wrap up, there’s one aspect worth mentioning. BRN currently has no debt on its balance sheet, which is rare for a loss-making loss-making, growth company, which usually has a high level of debt relative to its equity. This means that BRN 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:

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

1. Valuation: What is BRN 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 BRN 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 BrainChip Holdings’s board and the CEO’s back ground.
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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Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article 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.