With the business potentially at an important milestone, we thought we'd take a closer look at NEXGEL, Inc.'s (NASDAQ:NXGL) future prospects. NEXGEL, Inc. manufactures high water content, electron beam cross-linked, and aqueous polymer hydrogels and gels for wound care, medical diagnostics, transdermal drug delivery, and cosmetics in the United States. The company’s loss has recently broadened since it announced a US$3.0m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$3.2m, moving it further away from breakeven. The most pressing concern for investors is NEXGEL'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.

NEXGEL is bordering on breakeven, according to some American Medical Equipment analysts. They anticipate the company to incur a final loss in 2026, before generating positive profits of US$3.9m in 2027. Therefore, the company is expected to breakeven just over a year from today. 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 50%, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Underlying developments driving NEXGEL's growth isn’t the focus of this broad overview, however, take into account that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

One thing we would like to bring into light with NEXGEL is its relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in NEXGEL's case is 42%. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on NEXGEL, so if you are interested in understanding the company at a deeper level, take a look at NEXGEL's company page on Simply Wall St. We've also compiled a list of essential aspects you should look at:

1. Historical Track Record: What has NEXGEL'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 NEXGEL'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. 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.