Market Sentiment Around Loss-Making NEXGEL, Inc. (NASDAQ:NXGL)

NEXGEL, Inc. (NASDAQ:NXGL) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. NEXGEL, Inc. manufactures high water content, electron beam cross-linked, and aqueous polymer hydrogels and gels. The US$9.9m market-cap company’s loss lessened since it announced a US$4.7m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$3.4m, as it approaches breakeven. The most pressing concern for investors is NEXGEL'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.

See our latest analysis for NEXGEL

NEXGEL is bordering on breakeven, according to some American Medical Equipment analysts. They anticipate the company to incur a final loss in 2024, before generating positive profits of US$1.7m in 2025. Therefore, the company is expected to breakeven roughly 2 years from today. How fast will the company have to grow each year in order to reach the breakeven point by 2025? Working backwards from analyst estimates, it turns out that they expect the company to grow 72% 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 NEXGEL's growth isn’t the focus of this broad overview, however, 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 aspect worth mentioning. The company has managed its capital judiciously, with debt making up 4.2% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

There are too many aspects of NEXGEL to cover in one brief article, but the key fundamentals for the company can all be found in one place – NEXGEL's company page on Simply Wall St. We've also put together a list of pertinent aspects you should look at:

1. Historical Track Record: What has NEXGEL'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 NEXGEL'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.