Redsense Medical AB (publ)'s (NGM:REDS) Profit Outlook

We feel now is a pretty good time to analyse Redsense Medical AB (publ)'s (NGM: REDS) business as it appears the company may be on the cusp of a considerable accomplishment. Redsense Medical AB (publ) develops, markets, and sells monitoring systems for medical treatments primarily in Europe and the United States. With the latest financial year loss of kr8.0m and a trailing-twelve-month loss of kr6.9m, the kr124m market-cap company alleviated its loss by moving closer towards its target of breakeven. The most pressing concern for investors is Redsense Medical's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

Our analysis indicates that REDS is potentially overvalued!

Redsense Medical is bordering on breakeven, according to some Swedish Medical Equipment analysts. They expect the company to post a final loss in 2023, before turning a profit of kr8.3m in 2024. Therefore, the company is expected to breakeven roughly 2 years 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 109%, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected. We're not going to go through company-specific developments for Redsense Medical given that this is a high-level summary, however, take into account that generally 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 Redsense Medical has no debt on its balance sheet, which is quite unusual for a cash-burning 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.

Next Steps:
There are key fundamentals of Redsense Medical 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 Redsense Medical, take a look at Redsense Medical's company page on Simply Wall St. We've also compiled a list of relevant aspects you should look at:

1. Historical Track Record: What has Redsense Medical'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 Redsense Medical'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.