10x Genomics, Inc. (NASDAQ:TXG): Is Breakeven Near?

With the business potentially at an important milestone, we thought we'd take a closer look at 10x Genomics, Inc.'s (NASDAQ:TXG) future prospects. 10x Genomics, Inc., a life science technology company, develops and sells instruments, consumables, and software for analyzing biological systems in North America, Europe, the Middle East, Africa, China, and the Asia Pacific. The US$21b market-cap company posted a loss in its most recent financial year of US$31m and a latest trailing-twelve-month loss of US$134m leading to an even wider gap between loss and breakeven. Many investors are wondering about the rate at which 10x Genomics will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.

Check out our latest analysis for 10x Genomics

According to the 7 industry analysts covering 10x Genomics, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2021, before generating positive profits of US$29m in 2022. The company is therefore projected 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 93% year-on-year, on average, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Given this is a high-level overview, we won’t go into details of 10x Genomics' upcoming projects, though, bear in mind that typically 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 aspect worth mentioning. 10x Genomics currently has no debt on its balance sheet, which is rare for a loss-making life science company, which usually has a high level of debt relative to its equity. This means that the company has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of 10x Genomics 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 10x Genomics, take a look at 10x Genomics' company page on Simply Wall St. We've also put together a list of relevant factors you should look at:

1. Historical Track Record: What has 10x Genomics' 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 10x Genomics' 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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