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We feel now is a pretty good time to analyse Inotiv, Inc.'s (NASDAQ:NOTV) business as it appears the company may be on the cusp of a considerable accomplishment. Inotiv, Inc. provides drug discovery and development services to the pharmaceutical, chemical, and medical device industries; and sells analytical instruments to the pharmaceutical development and contract research industries. The US$1.3b market-cap company posted a loss in its most recent financial year of US$4.7m and a latest trailing-twelve-month loss of US$5.1m leading to an even wider gap between loss and breakeven. Many investors are wondering about the rate at which Inotiv 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.
Inotiv is bordering on breakeven, according to the 2 American Life Sciences analysts. They expect the company to post a final loss in 2021, before turning a profit of US$10m in 2022. So, the company is predicted to breakeven just over a year from now. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 80%, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.
We're not going to go through company-specific developments for Inotiv given that this is a high-level summary, though, take into account that generally life science companies, depending on the stage of product development, have irregular periods of cash flow. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.
One thing we would like to bring into light with Inotiv is its relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Inotiv's case is 50%. Note that a higher debt obligation increases the risk in investing in the loss-making company.
There are key fundamentals of Inotiv 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 Inotiv, take a look at Inotiv's company page on Simply Wall St. We've also compiled a list of relevant aspects you should further examine:
Valuation: What is Inotiv 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 Inotiv is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Inotiv’s board and the CEO’s background.
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.
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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