Yahoo Finance Medlab Clinical Limited's (ASX:MDC) Path To Profitability
We feel now is a pretty good time to analyse Medlab Clinical Limited's (ASX:MDC) business as it appears the company may be on the cusp of a considerable accomplishment. Medlab Clinical Limited, a medical research and development facility, engages in the nutraceutical products and pharmaceutical research businesses in Australia. The AU$70m market-cap company announced a latest loss of AU$13m on 30 June 2020 for its most recent financial year result. The most pressing concern for investors is Medlab Clinical'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.
See our latest analysis for Medlab Clinical
Medlab Clinical is bordering on breakeven, according to some Australian Biotechs analysts. They anticipate the company to incur a final loss in 2022, before generating positive profits of AU$4.2m in 2023. Therefore, the company is expected to breakeven roughly 3 years from today. How fast will the company have to grow each year in order to reach the breakeven point by 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 39% year-on-year, on average, 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 Medlab Clinical's growth isn’t the focus of this broad overview, though, keep in mind that by and large biotechs, 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’d like to point out is that The company has managed its capital prudently, with debt making up 0.8% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.
Next Steps:
There are too many aspects of Medlab Clinical to cover in one brief article, but the key fundamentals for the company can all be found in one place – Medlab Clinical's company page on Simply Wall St. We've also compiled a list of essential factors you should further research:
Historical Track Record: What has Medlab Clinical's performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Medlab Clinical'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. 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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