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

Simply Wall St

Next Science Limited's (ASX:NXS): Next Science Limited, a medical technology company, develops and commercializes non-toxic technology products with efficacy in eradicating biofilm based and free-floating bacteria. The AU$412m market-cap posted a loss in its most recent financial year of -US$13.7m and a latest trailing-twelve-month loss of -US$14.4m leading to an even wider gap between loss and breakeven. As path to profitability is the topic on NXS’s investors mind, I’ve decided to gauge market sentiment. In this article, I will touch on the expectations for NXS’s growth and when analysts expect the company to become profitable.

Check out 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$9.1m in 2022. So, NXS is predicted to breakeven approximately 3 years from now. 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 69%, 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, November 15th 2019

Given this is a high-level overview, I won’t go into details of NXS’s upcoming projects, though, keep in mind that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

Before I wrap up, there’s one aspect worth mentioning. NXS currently has no debt on its balance sheet, which is rare for a loss-making loss-making, growth company, which usually has a high level of 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 examine:

  1. Historical Track Record: What has NXS'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.
  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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.