Market Sentiment Around Loss-Making AxoGen Inc (NASDAQ:AXGN)

AxoGen Inc's (NASDAQ:AXGN): AxoGen, Inc. develops and markets surgical solutions for peripheral nerve injuries. The company’s loss has recently broadened since it announced a -US$10.45m loss in the full financial year, compared to the latest trailing-twelve-month loss of -US$12.32m, moving it further away from breakeven. Many investors are wondering the rate at which AXGN will turn a profit, with the big question being “when will the company breakeven?” In this article, I will touch on the expectations for AXGN’s growth and when analysts expect the company to become profitable.

Expectation from Medical Equipment analysts is AXGN is on the verge of breakeven. They anticipate the company to incur a final loss in 2019, before generating positive profits of US$8.33m in 2020. AXGN is therefore projected to breakeven around a couple of months from now! What rate will AXGN have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 82.06%, which signals high confidence from analysts. If this rate turns out to be too aggressive, AXGN may become profitable much later than analysts predict.

I’m not going to go through company-specific developments for AXGN given that this is a high-level summary, but, bear in mind that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

One thing I would like to bring into light with AXGN is its debt-to-equity ratio of 113.34%. Typically, debt shouldn’t exceed 40% of your equity, which in AXGN’s case, it has significantly overshot. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

There are key fundamentals of AXGN which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at AXGN, take a look at AXGN’s company page on Simply Wall St. I’ve also compiled a list of essential factors you should look at:

1. Historical Track Record: What has AXGN'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 AxoGen’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.