Next Science Limited (ASX:NXS): Are Analysts Optimistic?

Next Science Limited's (ASX:NXS): Next Science Limited, a medical technology company, researches, develops, and commercializes non-toxic technology products with efficacy in eradicating biofilm based and free-floating bacteria in the United States and Australia. The AU$240m market-cap company announced a latest loss of -US$14.4m on 31 December 2019 for its most recent financial year result. The most pressing concern for investors is NXS’s path to profitability – when will it breakeven? I’ve put together a brief outline of industry analyst expectations for NXS, its year of breakeven and its implied growth rate.

See our latest analysis for Next Science

NXS is bordering on breakeven, according to the 2 Medical Equipment analysts. They expect the company to post a final loss in 2021, before turning a profit of US$13m in 2022. So, NXS is predicted to breakeven approximately 2 years from today. What rate will NXS have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 76%, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

ASX:NXS Past and Future Earnings July 3rd 2020

Given this is a high-level overview, I won’t go into details of NXS’s upcoming projects, but, keep 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 I wrap up, there’s one aspect worth mentioning. NXS currently has no debt on its balance sheet, which is quite unusual for a cash-burning loss-making, growth company, which typically has high debt relative to its equity. This means that NXS 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:

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

1. Valuation: What is NXS 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 NXS 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 Next Science’s board and the CEO’s back ground.

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.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.