Growth Momentum over Valuation? By TipRanks
Bionano Genomics, (BNGO), is a company I do not like because it has a high valuation but lacks profitability. This offsets its growth momentum.
Bionano Genomics provides genome analysis and life sciences instrumentation to geneticists. They also provide diagnostic testing for autistic people. TipRanks shows the stock chart for Bionano.
Bionano Genomics’ strong revenue growth has been driven by the Saphyr implemented base growth. It was adopted by two large UK laboratories that are part of the NHS.
Lineagen, the company that offers genetic testing services to people with neurodevelopmental issues for over nine years has performed more than 65,000 of these tests.
Company is on the right track to achieving all its milestones for 2021.
Bionano Genomics reported financial results for the second quarter of 2021, ended June 30, and announced total revenue of approximately $3.9 million, showing an increase of 226% on a year-over-year basis, and beating analysts’ estimates of $3.3 million.
The company reported operating expenses of $12.2 million to $17.9million in its first quarter. It had cash and cash equivalents outstanding of $333 million. This compares with $38.4 million at end of fourth quarter 2020.
This company achieved excellent results in many areas including the rapid growth of the cytogenetics market and higher global acceptance of its products.
Bionano Genomics is planning to launch a prototype of its next-gen Saphyr Systems by the end the current fiscal year. Bionano Genomics also anticipates reaching 150 Saphyr Systems in the fourth quarter. This is a 50 percent increase over the quarter 2020.
Bionano Genomics appears to be well positioned to achieve or surpass its fourth quarter 2021 targets. It will be fascinating to see where CEO Erik Holmlin takes the company.
Bionano Genomics’ stock looks very expensive right now, given that the company itself is unprofitable.
The company’s forward revenue is 47.4x and it expects to lose nearly $60 million annually in EBITDA by 2021.
Wall Street’s Take
Bionano Genomics receives moderate buy analyst consensus from Wall Street analysts. This is based on two unanimous Buy ratings.
Bionano has a $10 average target price, which places the upside potential as high as 96.3%.
Summary and Conclusions
Bionano Genomics is very costly here due to its low profitability and high price per sale multiple.
However, the company operates in an industry with high growth potential that will benefit from advances in genomics.
Wall Street analysts are bullish about the stock as their consensus price target suggests nearly 100% upside potential for the stock over the next quarters.
This company has strong growth potential and could potentially generate attractive returns to shareholders if it becomes profitable. Investors should remember that the company is still unprofitable and therefore, carries a greater risk.
Disclosure: Samuel Smith didn’t hold any position at the time this article was published.
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