10x Genomics, Inc.'s (NASDAQ:TXG) Profit Outlook
10x Genomics, Inc. (NASDAQ:TXG) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. 10x Genomics, Inc., a life science technology company, develops and sells instruments, consumables, and software for analyzing biological systems in North America, Europe, the Middle East, Africa, China, and the Asia Pacific. The company’s loss has recently broadened since it announced a US$31m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$78m, moving it further away from breakeven. Many investors are wondering about the rate at which 10x Genomics will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.
See our latest analysis for 10x Genomics
According to the 6 industry analysts covering 10x Genomics, the consensus is that breakeven is near. They expect the company to post a final loss in 2021, before turning a profit of US$41m in 2022. Therefore, the company is expected to breakeven roughly 2 years from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 105%, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Given this is a high-level overview, we won’t go into details of 10x Genomics' upcoming projects, however, take into account that generally a life science 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 we wrap up, there’s one aspect worth mentioning. 10x Genomics currently has no debt on its balance sheet, which is quite unusual for a cash-burning life science 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.
Next Steps:
There are key fundamentals of 10x Genomics which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at 10x Genomics, take a look at 10x Genomics' company page on Simply Wall St. We've also put together a list of relevant aspects you should further examine:
Historical Track Record: What has 10x Genomics' 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 10x Genomics' 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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