BioNano Genomics (BNGO) is a life sciences instrumentation company for genomics analysis.
The main value for BNGO comes from developing and selling its Saphyr system. This system enables clients to perform highly sensitive and specific structural variation detection for accelerating the discovery of new diagnostics and therapeutic targets. It also improves the study of chromosome changes.
Additionally, Bionano offers clients Bionano kits for extracting and labeling ultra-high molecular weight DNA along with a data-solutions offering for bioinformatics processing.
The company is currently riding enormous momentum from its high-tech offerings. Its offerings are facilitating the genomics revolution, as well as bullishness on Bionano's ability to disrupt the cytogenetics testing market.
Over the past year alone, the stock has risen more than 1,400%, yet further upside could be in store if the company is able to successfully clear barriers to global adoption of its Saphyr platform. (See BioNano Genomics stock chart on TipRanks)
Even though the company already boasts of remarkable momentum and long-term potential, it has also managed to benefit significantly from the Wall Street Bets frenzy. Management has capitalized on the buying frenzy by issuing more equity at elevated valuation levels. As a result, the stock price appears rich at the moment.
Despite burning cash and running up huge losses, the enterprise value trades at 89 times forward sales and 159 times trailing sales. As a result, the company will have to generate tremendous growth for a sustained period of time in order to scale into profitability and also generate enough profits to justify the lofty valuation.
Wall Street’s Take
From Wall Street analysts, BNGO earns a Strong Buy analyst consensus based on 4 Buy ratings in the past 3 months. Additionally, the average analyst BioNano price target of $11.50 puts the upside potential at 58.62%.
Summary and Conclusions
BNGO is riding significant momentum from the Wall Street Bets frenzy, which has pushed its valuation to lofty levels. It has also given the company significant new equity capital through its at-the-money equity issuance program. Additionally, analysts are unanimously bullish on the stock, citing its capacity to significantly disrupt aspects of the lab and aid the genomics revolution.
On the other hand, revenue has declined sharply over the past several years and – despite expectations for strong growth in the years to come – the company has a long way to grow to justify its current valuation. On top of that, the company is bleeding cash right now and running up huge losses.
While its total addressable market is massive, until BNGO can prove that it can truly scale and sell its platform on a broad scale, it remains a highly speculative investment at current prices.
Additionally, the company must successfully execute on further research and development endeavors to widen its moat in order to capture sufficient share of its total addressable market.
Overall, BNGO seems to be a highly speculative investment whose stock price has likely outrun its fundamental improvement over the past year, by quite a substantial margin.
Disclosure: On the date of publication, Samuel Smith had no position in any of the companies discussed in this article.
Disclaimer: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities.