Analysts Expect Breakeven For Think Research Corporation (CVE:THNK) Before Long

With the business potentially at an important milestone, we thought we'd take a closer look at Think Research Corporation's (CVE:THNK) future prospects. Think Research Corp., an investment holding company, develops and provides clinical software and services for the health care industry. The CA$186m market-cap company announced a latest loss of CA$10m on 30 September 2020 for its most recent financial year result. The most pressing concern for investors is Think Research's path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

Check out our latest analysis for Think Research

Think Research is bordering on breakeven, according to the 3 Canadian Healthcare Services analysts. They anticipate the company to incur a final loss in 2021, before generating positive profits of CA$977k in 2022. The company is therefore projected to breakeven just over a year from now. How fast will the company have to grow each year in order to reach the breakeven point by 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 61% 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 Think Research given that this is a high-level summary, but, take into account that by and large a healthcare tech company has lumpy cash flows which are contingent on the product and stage of development the company is in. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

Before we wrap up, there’s one issue worth mentioning. Think Research currently has negative equity on its balance sheet. Accounting methods used to deal with losses accumulated over time can cause this to occur. This is because liabilities are carried forward into the future until it cancels. These losses tend to occur only on paper, however, in other cases it can be forewarning.

Next Steps:

There are key fundamentals of Think Research 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 Think Research, take a look at Think Research's company page on Simply Wall St. We've also compiled a list of relevant aspects you should look at:

1. Valuation: What is Think Research 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 Think Research 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 Think Research’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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