Analysts Expect Huize Holding Limited (NASDAQ:HUIZ) To Breakeven Soon

With the business potentially at an important milestone, we thought we'd take a closer look at Huize Holding Limited's (NASDAQ:HUIZ) future prospects. Huize Holding Limited, together with its subsidiaries, offers insurance brokerage services in the People’s Republic of China. The company’s loss has recently broadened since it announced a CN¥21m loss in the full financial year, compared to the latest trailing-twelve-month loss of CN¥61m, moving it further away from breakeven. The most pressing concern for investors is Huize Holding's path to profitability – when will it 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 Huize Holding

Consensus from 3 of the American Insurance analysts is that Huize Holding is on the verge of breakeven. They expect the company to post a final loss in 2020, before turning a profit of CN¥23m in 2021. So, the company is predicted to breakeven approximately a year from now or less! At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 160%, which is extremely buoyant. 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 Huize Holding given that this is a high-level summary, but, take into account that typically 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 prudently, with debt making up 39% 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:

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

1. Historical Track Record: What has Huize Holding'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 Huize Holding'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.
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