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Zomedica Giving Mixed Signals By TipRanks


© Reuters. Zomedica Giving Mixed Signals

Founded in 2013 and publicly-traded since 2016, Zomedica (ZOM) is a relatively new organization. This veterinary-focused company makes medical devices for pets and has attracted a lot of interest from growth investors.

This is due to a variety of factors. One of the main reasons pet-friendly technology plays are gaining popularity is the rise in pet adoption rates since the beginning of the pandemic. Pet adoption can be a long-term commitment. The potential revenue streams that veterinary-related companies will see over the next few years could prove to be very attractive.

ZOM stock soared to almost $3 per share earlier in the year, along with other memes that are high-growth. This is because Zomedica started the year with a share price of $0.35.

ZOM shares trade for $0.50 each at the moment. ZOM stock is currently trading at around $0.50 an ounce. Investors in this early-stage vet tech play have been able to keep up their investments over the past year, but not significantly.

Let us examine the growth prospects of this company and how ZOM stock will fare in the future. To be completely transparent, this stock has a neutral rating at the moment.

(See Zomedica stock charts on TipRanks)

Growth in Diagnostics Market Bullish for ZOM Stock

Zomedica’s core product, its TRUFORMA in-clinic biosensor diagnostics platform, is the key driver that investors in ZOM stock look to for growth.

The TRUFORMA diagnostic system is relatively new for veterinarian offices. The system allows veterinarians to test their customers at their business rather than having to send them to a laboratory waiting to receive results. It’s better for vet offices and customers. All win.

According to vet websites, it may take up to a week to get diagnostic results from a lab. Pet owners seek results quickly. TRUFORMA provides this ability to veterinarians, and it can be used for many types of testing.

It is expected to be disruptive in a large, growing global veterinary diagnostics market. The market could grow to $3.9billion in 2026, from $2.5 billion as an estimated value in 2021.  

This is a decent amount of growth.

Investors that believe Zomedica has the potential to grab a substantial portion of this market may be interested in this young company. However, Zomedica was valued at nearly $3 per share. This is close to the global market’s total value. This stock should have had a cooling off period.

Supplier Challenges Evident from Q2 Earnings

Zomedica had no revenue in 2020. It is still early in commercializing the TRUFORMA product. Zomedica saw its first TRUFORMA product commercially sold in March. The company’s share prices declined with increased commercialization for different reasons.

This decline rate was quite remarkable. The next month saw Zomedica suffer a 60% drop. It appears that this is due in part to problems the company experienced with its rollout.

Company stated that there was an issue with the manufacturer of test assays. This makes it difficult for equipment sellers to get the cartridges they need. Zomedica further linked the adverse impact on the TRUFORMA system’s market acceptance to the delay in these assays.

Zomedica believes that these issues will be addressed by the end the year. It is also paying for an increased sales team that is largely spinning its wheels. Therefore, Zomedica is difficult to view positively its recent performance.

TipRanks’ Smart Score

Zomedica earns a TipRanks Smart Score of 3, meaning it is likely to underperform the market. The Smart Score is derived from 8 unique data sets including Analyst recommendations, Crowd Wisdom, Hedge Fund Activity, Media Sentiment and multiple Technical stock factors. 

Bottom Line

Zomedica is a company that has lost its luster, at least in terms of being considered a meme stock. The company’s positive momentum from earlier in the year seems to have diminished.

However, the company’s future growth is possible, just like other stocks which have rallied quickly in short periods of time.

Disclosure: At the time of publication, Chris MacDonald did not have a position in any of the securities mentioned in this article

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