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We feel now is a pretty good time to analyse Echo IQ Limited's (ASX:EIQ) business as it appears the company may be on the cusp of a considerable accomplishment. Echo IQ Limited provides artificial intelligence (AI) diagnostics tool that enhance the diagnosis of structural heart disease in Australia and the United Kingdom. The AU$168m market-cap company posted a loss in its most recent financial year of AU$5.4m and a latest trailing-twelve-month loss of AU$8.9m leading to an even wider gap between loss and breakeven. As path to profitability is the topic on Echo IQ's investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.
Expectations from some of the Australian Software analysts is that Echo IQ is on the verge of breakeven. They anticipate the company to incur a final loss in 2025, before generating positive profits of AU$1.1m in 2026. So, the company is predicted 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 111%, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Given this is a high-level overview, we won’t go into details of Echo IQ's upcoming projects, though, 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.
Check out our latest analysis for Echo IQ
One thing we’d like to point out is that Echo IQ has no debt on its balance sheet, which is quite unusual for a cash-burning growth company, which usually has a high level of 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:
This article is not intended to be a comprehensive analysis on Echo IQ, so if you are interested in understanding the company at a deeper level, take a look at Echo IQ's company page on Simply Wall St. We've also put together a list of key aspects you should further examine:
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Historical Track Record: What has Echo IQ'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.
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Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Echo IQ's board and the CEO’s background.
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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.
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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.