PainChek Ltd.’s (ASX:PCK): PainChek Ltd. provides pain assessment solutions primarily in Australia and Europe. On 30 June 2019, the AU$192m market-cap posted a loss of -AU$3.3m for its most recent financial year. The most pressing concern for investors is PCK’s path to profitability – when will it breakeven? In this article, I will touch on the expectations for PCK’s growth and when analysts expect the company to become profitable.
See our latest analysis for PainChek
According to the industry analysts covering PCK, breakeven is near. They anticipate the company to incur a final loss in 2021, before generating positive profits of AU$4.1m in 2022. So, PCK is predicted to breakeven approximately 3 years from today. How fast will PCK have to grow each year in order to reach the breakeven point by 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 87% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, PCK may become profitable much later than analysts predict.
Underlying developments driving PCK’s growth isn’t the focus of this broad overview, though, bear in mind that by and large a healthcare tech company has lumpy cash flows which are contingent on the product and stage of development the company is in. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.
Before I wrap up, there’s one aspect worth mentioning. PCK currently has no debt on its balance sheet, which is quite unusual for a cash-burning healthcare tech company, which usually has a high level of debt relative to its equity. This means that PCK 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 PCK, so if you are interested in understanding the company at a deeper level, take a look at PCK’s company page on Simply Wall St. I’ve also compiled a list of important factors you should further examine:
- Valuation: What is PCK 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 PCK 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 PainChek’s board and the CEO’s back ground.
- 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.
If you spot an error that warrants correction, please contact the editor at [email protected]. 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.
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. Thank you for reading.
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