We feel now is a pretty good time to analyse Biome Australia Limited's (ASX:BIO) business as it appears the company may be on the cusp of a considerable accomplishment. Biome Australia Limited develops, commercializes, and markets various live biotherapeutics and complimentary medicines in Australia and internationally. On 30 June 2022, the AU$15m market-cap company posted a loss of AU$4.5m for its most recent financial year. The most pressing concern for investors is Biome Australia's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.
According to some industry analysts covering Biome Australia, breakeven is near. They anticipate the company to incur a final loss in 2024, before generating positive profits of AU$200k in 2025. Therefore, the company is expected to breakeven roughly 3 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2025? Working backwards from analyst estimates, it turns out that they expect the company to grow 61% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Underlying developments driving Biome Australia's growth isn’t the focus of this broad overview, however, take into account that by and large a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
One thing we’d like to point out is that Biome Australia has no debt on its balance sheet, which is rare for a loss-making growth 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.
There are too many aspects of Biome Australia to cover in one brief article, but the key fundamentals for the company can all be found in one place – Biome Australia's company page on Simply Wall St. We've also compiled a list of pertinent aspects you should further examine:
Historical Track Record: What has Biome Australia'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 Biome Australia'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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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