Two months ago, just after Bionano Genomics (BNGO) had reported a bit of an earnings miss, Maxim analyst Jason McCarthy was sufficiently discouraged about the company’s prospects that he cut his price target on the San Diego-based cytogenetics specialist’s stock by $4 to $10.
Two months later, McCarthy is holding firm on that revised prediction, though, and reiterating his “buy” recommendation on the stock as well in a note published yesterday — and why not? In the two months since he last doubled down on the stock, Bionano shares are up 20%. So long as the buy thesis is working, there doesn’t seem any good reason not recommend Bionano again.
In yesterday’s latest update, McCarthy cites back-to-back peer-reviewed publications in the American Journal of Human Genetics, reviewing findings from the genomes of patients with inherited genetic disease and of those of hematological malignancies, that together “outline the utility of optical genome mapping (OGM) as a superior alternative to traditional methods for structural variant (SV) analysis.”
Curiously, Bionano’s own press release describing the publications doesn’t mention this point, but in McCarthy’s report, he highlights the fact that both papers that were published utilized data generated with the use of Bionano’s Saphyr genomic optical mapping systems. As the analyst points out, each of the Radboud University Medical Center, Cochin Hospital in Paris, Hospices Civils in Lyon, and the University Hospital of Clermont-Ferrand, whose scientists and clinicians contributed to the published studies, are “notable Saphyr users.” And these publications further argue that OGM (i.e. Bionano’s Saphyr) “has the potential to become a primary analysis for most molecular cytogenetics applications and provides a complement to existing sequencing-based methods for a more comprehensive view of genome variation.”
Why? In contrast to traditional cytogenetic methods, which labor under the constraints of “low resolution and inability to detect balanced SVs or indicate the genomic localization and orientation of duplicated segments or insertions,” Bionano’s Saphyr system, says McCarthy, “provides a cost-effective and easy-to-use alternative with high resolution for comprehensive detection of chromosomal aberrations and structural variants.” And now, McCarthy says we’re seeing increased “awareness” of this “on both the research side and the investor side.”
Result: “The pieces are coming together for Bionano to reach a steeper growth trajectory.”
So what does all of this mean for Bionano? Curiously, it doesn’t seem to change the analyst’s buy thesis at all. You see, despite promising a “steeper growth trajectory,” McCarthy’s latest estimates for revenues and growth rates are in fact unchanged from two months ago. Then as today, the analyst forecasts that revenues will roughly double over 2020 numbers to $15.5 million this year, then grow a further 73% through 2022. Expenses will continue to outweigh revenues, however, keeping Bionano unprofitable through at least 2022 — and probably quite a bit longer than that.
Academic papers and McCarthy’s optimism notwithstanding, the consensus on Wall Street remains: Bionano investors will probably have to wait until at least 2025 before they see their first profit.
All in all, there is general agreement on Wall Street that BNGO is a quality investment, and the analyst consensus rating shows that: it is a unanimous Strong Buy, based on 4 recent reviews. The shares are priced at $6.78, and their average target is $11.50, implying ~69% upside potential for the next 12 months. (See BNGO stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.