Breakeven On The Horizon For Harm Reduction Group AB (publ) (NGM:NOHARM)

With the business potentially at an important milestone, we thought we'd take a closer look at Harm Reduction Group AB (publ)'s (NGM:NOHARM) future prospects. Harm Reduction Group AB (publ) provides legal nicotine products as a substitute for the harmful tobacco smoking. On 31 December 2023, the kr36m market-cap company posted a loss of kr25m for its most recent financial year. Many investors are wondering about the rate at which Harm Reduction Group 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.

See our latest analysis for Harm Reduction Group

Harm Reduction Group is bordering on breakeven, according to some Swedish Tobacco analysts. They anticipate the company to incur a final loss in 2024, before generating positive profits of kr1.0m in 2025. The company is therefore projected to breakeven just over a year from today. 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 122%, which signals high confidence from analysts. 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 Harm Reduction Group given that this is a high-level summary, though, bear in mind that generally a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there’s one issue worth mentioning. Harm Reduction Group currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Harm Reduction Group's case is 41%. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

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

1. Valuation: What is Harm Reduction Group 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 Harm Reduction Group 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 Harm Reduction Group’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.