We feel now is a pretty good time to analyse Nephros, Inc.'s (NASDAQ:NEPH) business as it appears the company may be on the cusp of a considerable accomplishment. Nephros, Inc. engages in development and sale of high performance water solutions to the medical and commercial markets in the United States. The US$20m market-cap company’s loss lessened since it announced a US$4.6m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$1.7m, as it approaches breakeven. The most pressing concern for investors is Nephros' path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.
Nephros is bordering on breakeven, according to some American Consumer Durables analysts. They expect the company to post a final loss in 2024, before turning a profit of US$649k in 2025. So, the company is predicted to breakeven approximately 2 years from today. 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 96% is expected, which is extremely buoyant. 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 Nephros given that this is a high-level summary, though, bear in mind that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
Before we wrap up, there’s one aspect worth mentioning. Nephros currently has no debt on its balance sheet, which is rare for a loss-making growth company, which typically has high 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.
This article is not intended to be a comprehensive analysis on Nephros, so if you are interested in understanding the company at a deeper level, take a look at Nephros' company page on Simply Wall St. We've also put together a list of relevant factors you should look at:
Valuation: What is Nephros 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 Nephros 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 Nephros’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.