Yahoo Finance TransMedics Group, Inc. (NASDAQ:TMDX) About To Shift From Loss To Profit
We feel now is a pretty good time to analyse TransMedics Group, Inc.'s (NASDAQ:TMDX) business as it appears the company may be on the cusp of a considerable accomplishment. TransMedics Group, Inc., a commercial-stage medical technology company, engages in transforming organ transplant therapy for end-stage organ failure patients in the United States and internationally. The US$4.6b market-cap company posted a loss in its most recent financial year of US$25m and a latest trailing-twelve-month loss of US$10m shrinking the gap between loss and breakeven. The most pressing concern for investors is TransMedics Group'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.
View our latest analysis for TransMedics Group
Consensus from 9 of the American Medical Equipment analysts is that TransMedics Group is on the verge of breakeven. They anticipate the company to incur a final loss in 2023, before generating positive profits of US$34m in 2024. Therefore, the company is expected to breakeven roughly 12 months 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 42%, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Underlying developments driving TransMedics Group's growth isn’t the focus of this broad overview, though, bear in mind 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. TransMedics Group currently has a debt-to-equity ratio of over 2x. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. Note that a higher debt obligation increases the risk around investing in the loss-making company.
Next Steps:
This article is not intended to be a comprehensive analysis on TransMedics Group, so if you are interested in understanding the company at a deeper level, take a look at TransMedics Group's company page on Simply Wall St. We've also compiled a list of essential factors you should further research:
Valuation: What is TransMedics Group 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 TransMedics Group 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 TransMedics Group’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.
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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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
