ShockWave Medical, Inc.'s (NASDAQ:SWAV) Path To Profitability

We feel now is a pretty good time to analyse ShockWave Medical, Inc.'s (NASDAQ:SWAV) business as it appears the company may be on the cusp of a considerable accomplishment. ShockWave Medical, Inc., a medical device company, engages in developing and commercializing intravascular lithotripsy technology to treat calcified plaque in patients with peripheral vascular, coronary vascular, and heart valve diseases worldwide. The US$5.5b market-cap company posted a loss in its most recent financial year of US$66m and a latest trailing-twelve-month loss of US$71m leading to an even wider gap between loss and breakeven. The most pressing concern for investors is ShockWave Medical's path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

See our latest analysis for ShockWave Medical

According to the 6 industry analysts covering ShockWave Medical, the consensus is that breakeven is near. They expect the company to post a final loss in 2021, before turning a profit of US$5.5m in 2022. Therefore, the company is expected to breakeven just over a year from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 69% is expected, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings-per-share-growth

Underlying developments driving ShockWave Medical's growth isn’t the focus of this broad overview, though, keep in mind that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital prudently, with debt making up 8.2% of equity. This means that it 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 ShockWave 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 ShockWave Medical, take a look at ShockWave Medical's company page on Simply Wall St. We've also compiled a list of essential aspects you should further examine:

1. Historical Track Record: What has ShockWave 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 ShockWave 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.

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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