Market Sentiment Around Loss-Making EirGenix Inc. (GTSM:6589)

With the business potentially at an important milestone, we thought we'd take a closer look at EirGenix Inc.'s (GTSM:6589) future prospects. EirGenix Inc. operates as a contract development and manufacturing company Taiwan and internationally. On 31 December 2020, the NT$24b market-cap company posted a loss of NT$1.0b for its most recent financial year. As path to profitability is the topic on EirGenix's investors mind, we've decided to gauge market sentiment. 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 EirGenix

According to the 5 industry analysts covering EirGenix, the consensus is that breakeven is near. They expect the company to post a final loss in 2021, before turning a profit of NT$51m in 2022. So, the company is predicted to breakeven just over a year from today. 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 94% year-on-year, on average, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Underlying developments driving EirGenix's growth isn’t the focus of this broad overview, but, keep in mind that generally life science companies, depending on the stage of product development, have irregular periods of cash flow. So, 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. EirGenix currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in EirGenix's case is 53%. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.

Next Steps:

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

1. Historical Track Record: What has EirGenix's performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on EirGenix'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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