2020 is turning out to be a roller-coaster ride for investors of life science company BioNano Genomics (BNGO). Over the past six trading sessions, the share price has declined by 23%. The drop, however, was preceded by a massive 130% gain between early May and August. Yet, one 5-star analyst expects the extreme market gyrations to continue with a further swing upwards over the next 12 months.
DeGeeter’s confidence is based on BioNano’s role in cytogenetics – the study of chromosomal structures. Specifically, the potential of the company's genome imaging system, Saphyr.
“Our thesis on BNGO has been based on the potential of Saphyr to increase consumable revenues through validation and adoption for use in cytogenetics testing. Management noted labs validating Saphyr for cytogenetics accounted for roughly half of consumable revenues, which by our estimates accounted for most of the growth for this segment. Mgmt expects results from the first large validation cohort of US cytogenetics patients to be published in coming weeks.”
The numbers back up DeGeeter’s claims. In its latest “better-than-expected” 2Q20 earnings report, consumable revenues grew year-over-year by 79% to $711,000, with a strong showing in Europe in particular.
In fact, DeGeeter believes that in Europe, cytogenetics is “building toward a tipping point.” Validation studies for cytogenetics are being completed in labs in Germany, Italy, the Netherlands. But the European adoption only offers “upside” to DeGeeter’s Saphyr outlook. Yet, the bulk of the analyst’s forecast is based on US cytogenetics adoption.
“We expect growth in cytogenetics consumable revenue in the US to accelerate in 4Q20 following potential publication in medical journal of important validation findings from cytogenetics analysis from various hematologic malignancies,” the top analyst said.
Overall, DeGeeter has two additional analysts backing up his positive thesis. The two extra Buys result in a Strong Buy consensus rating and a $1.47 average price target. The potential upside, according to these analysts, is a tidy 124%. (See BioNano stock analysis on TipRanks)
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