Informatica Inc. (NYSE:INFA): Are Analysts Optimistic?

Informatica Inc. (NYSE:INFA) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Informatica Inc. develops an artificial intelligence-powered platform that connects, manages, and unifies data across multi-cloud, hybrid systems at enterprise scale in the United States. The company’s loss has recently broadened since it announced a US$54m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$194m, moving it further away from breakeven. Many investors are wondering about the rate at which Informatica will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

View our latest analysis for Informatica

According to the 14 industry analysts covering Informatica, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2023, before generating positive profits of US$58m in 2024. The company is therefore projected to breakeven just over a year from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 98% is expected, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving Informatica's growth isn’t the focus of this broad overview, though, take into account that by and large 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. Informatica currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Informatica's case is 90%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

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

1. Valuation: What is Informatica worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Informatica is currently mispriced by the market.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Informatica’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.