When Can We Expect A Profit From GenMark Diagnostics, Inc. (NASDAQ:GNMK)?

Simply Wall St
·3 min read

With the business potentially at an important milestone, we thought we'd take a closer look at GenMark Diagnostics, Inc.'s (NASDAQ:GNMK) future prospects. GenMark Diagnostics, Inc., a molecular diagnostics company, develops and commercializes molecular panels based on its proprietary eSensor electrochemical detection technology. On 31 December 2020, the US$1.4b market-cap company posted a loss of US$19m for its most recent financial year. The most pressing concern for investors is GenMark Diagnostics' path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

See our latest analysis for GenMark Diagnostics

According to the 5 industry analysts covering GenMark Diagnostics, the consensus is that breakeven is near. They expect the company to post a final loss in 2021, before turning a profit of US$14m in 2022. Therefore, the company is expected to breakeven just over a year from now. 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 94%, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

earnings-per-share-growth
earnings-per-share-growth

Underlying developments driving GenMark Diagnostics' growth isn’t the focus of this broad overview, however, keep in mind that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

One thing we would like to bring into light with GenMark Diagnostics is its relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in GenMark Diagnostics' case is 76%. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on GenMark Diagnostics, so if you are interested in understanding the company at a deeper level, take a look at GenMark Diagnostics' company page on Simply Wall St. We've also put together a list of pertinent aspects you should look at:

  1. Valuation: What is GenMark Diagnostics 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 GenMark Diagnostics is currently mispriced by the market.

  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on GenMark Diagnostics’s board and the CEO’s background.

  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.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.