You know there was some bad news with a company’s quarterly update when the stock tumbles after the results are announced. That’s what happened Friday with Bionano Genomics (BNGO). The cytogenetics specialist’s shares fell nearly 10% after the announcement of its Q3 results.
While Bionano reported $2.2 million in Q3 2020 revenue, slightly ahead of consensus expectations for $2.1 million, it represented a 33% decline year over year. Profits-wise, Bionano reported a $10.8 million net loss (up 69% year over year) as a result of increased research and development spending, and a near-doubling in selling, general, and administrative expenses.
Despite the disappointing reaction among investors, two Wall Street investment banks stepped in to reiterate their support of the stock, and to predict that Bionano stock will not only recover its losses, but grow three times in value over the next year… or maybe even four times.
Let’s begin with the less optimistic of these two notes, from Oppenheimer’s Kevin DeGeeter, who rates Bionano Genomics an Outperform (i.e. Buy) and believes that the stock’s $0.50-a-share price is going to $1.50 in the next 12 months. (To watch DeGeeter’s track record, click here)
DeGeeter starts out by noting that $2.2 million was at least “in line” with his own sales estimate of $2.3 million, and that flow cell (glass slides used in DNA analysis) sales were up 34% year over year and up 25% sequentially from Q2 2020. Sales of “consumable” products such as these flow cells are key to DeGeeter’s optimism about the stock, which he predicts will make up lost ground in Q4 to close out 2020 with $7.7 million in sales (just a bit below last year’s $8 million in sales). DeGeeter expects real growth to appear in 2021, with sales surging to $22.7 million, then nearly doubling again to $40.2 million in 2022.
As optimistic as DeGeeter is about the stock, Maxim’s Jason McCarthy is even more so, positing a $2 share price on Bionano Genomics 12 months from now, and rating the stock “buy.” (To watch McCarthy’s track record, click here)
Acknowledging the revenue decline year over year, McCarthy blames it on Covid temporarily depressing demand, and also a change in business model to a “rental-reagent model” — but emphasizes the speed of Bionano’s sales rebound, noting that total revenues were up 86% sequentially. Furthermore, McCarthy believes that revenue growth under the new business model will be “more predictable” and less “chunky.”
McCarthy also believes that Bionano’s Saphyr system will prove useful to researchers conducting a large US leukemia study, arguing that “Saphyr offers a simple and high throughput work flow” that is better and cheaper than existing methods of chromosomal analysis. And the analyst cites a “largest-to-date study in undiagnosed genetic disease” being conducted by University of California San Francisco, in which Saphyr again proved than existing “standard of care sequencing and cytogenetic methods” at diagnosing unknown genetic diseases.
Perhaps the most curious part of McCarthy’s report, however, is that he predicts Bionano’s revenues will be much lower than what DeGeeter is calling for both this year ($7.1 million) and next year as well ($19.2 million). Yet even with these smaller revenue numbers, his $2 price target implies 33% more upside in the stock than DeGeeter predicts.
Over the past 3 months, only one other analyst has thrown the hat in with a view on the stock. The additional Buy rating provides BNGO with a Strong Buy consensus rating. With an average price target of $1.55, investors stand to take home over 200% gain, should the target be met over 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.