Advertisement
New Zealand markets closed
  • NZX 50

    12,105.29
    +94.63 (+0.79%)
     
  • NZD/USD

    0.5973
    -0.0003 (-0.05%)
     
  • NZD/EUR

    0.5538
    +0.0005 (+0.09%)
     
  • ALL ORDS

    8,153.70
    +80.10 (+0.99%)
     
  • ASX 200

    7,896.90
    +77.30 (+0.99%)
     
  • OIL

    83.11
    -0.06 (-0.07%)
     
  • GOLD

    2,254.80
    +16.40 (+0.73%)
     
  • NASDAQ

    18,254.69
    -26.15 (-0.14%)
     
  • FTSE

    7,952.62
    +20.64 (+0.26%)
     
  • Dow Jones

    39,807.37
    +47.29 (+0.12%)
     
  • DAX

    18,492.49
    +15.40 (+0.08%)
     
  • Hang Seng

    16,541.42
    +148.58 (+0.91%)
     
  • NIKKEI 225

    40,369.44
    +201.37 (+0.50%)
     
  • NZD/JPY

    90.3520
    -0.0410 (-0.05%)
     

Loss-Making Pacific Edge Limited (NZE:PEB) Expected To Breakeven

Pacific Edge Limited’s (NZSE:PEB): Pacific Edge Limited, a cancer diagnostics company, develops and commercializes diagnostic and prognostic tools for the early detection and management of cancers. On 31 March 2018, the NZ$104.92M market-cap posted a loss of -NZ$19.64M for its most recent financial year. Many investors are wondering the rate at which PEB will turn a profit, with the big question being “when will the company breakeven?” I’ve put together a brief outline of industry analyst expectations for PEB, its year of breakeven and its implied growth rate.

View our latest analysis for Pacific Edge

According to the industry analysts covering PEB, breakeven is near. They anticipate the company to incur a final loss in 2020, before generating positive profits of NZ$15.85M in 2021. PEB is therefore projected to breakeven around 3 years from now. What rate will PEB 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 57.93%, which is extremely buoyant. If this rate turns out to be too aggressive, PEB may become profitable much later than analysts predict.

NZSE:PEB Past Future Earnings Jun 20th 18
NZSE:PEB Past Future Earnings Jun 20th 18

Given this is a high-level overview, I won’t go into detail the detail of PEB’s upcoming projects, however, take into account that typically a biotech has lumpy cash flows which are contingent on the product type and stage of development the company is in. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

ADVERTISEMENT

Before I wrap up, there’s one aspect worth mentioning. PEB has managed its capital prudently, with debt making up 0.60% of equity. This means that PEB has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of PEB which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at PEB, take a look at PEB’s company page on Simply Wall St. I’ve also put together a list of important aspects you should further examine:

  1. Historical Track Record: What has PEB’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 Pacific Edge’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.


To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.