The stock market is off to a solid start in 2021. But in a market made up stocks BioNano Genomics (NASDAQ:BNGO) has enjoyed a noteworthy rally investors should expect to continue trending higher. Let’s take a look at what’s happening off and on the price chart of BNGO stock, then offer a risk-adjusted determination aligned with those findings.
Amid this year’s media-sensationalized short squeeze in GameStop (NYSE:GME), volatile new highs in cryptos Ethereum (CCC:ETH-USD) and Bitcoin (CCC:BTC-USD), 3D stocks printing money for bulls or SPACs like Workhorse Group (NASDAQ:WKHS) and Virgin Galactic (NYSE:SPCE) surging to record highs, shares of Bionano may have gone unnoticed. But today’s friendly advice is investors shouldn’t make that mistake going forward.
So, who is BioNano Genomics? What’s behind year-to-date gains of around 260% and a stunning 2,200% since BNGO’s December low? And why might investors expect shares to continue their winning ways? It’s all about Saphyr. Without getting too technical and beyond the comfort zone of our non-PhD paygrade, BNGO’s Saphyr optical genome mapping (OGM) system has been the driving force in the stock’s rally.
Saphyr has filled a critical gap between long and short-read sequencing technologies that’s proving extremely useful to researchers in uncovering structural variants within genes. And that means helping with more targeted cancer treatments, maybe prenatal screening or even understanding the novel coronavirus better is possible.
Moreover, a well-received Next-Generation Crytogenomics Symposium presented by BioNano in January effectively put the small-cap outfit’s Saphyr system on the healthcare community’s radar, while also helping fuel this year’s share strength.
Management has taken advantage of the BNGO’s run-up in stock price by raising about $330 million in share sales to further fund the company’s research and development efforts.
But before readers think BioNano is taking advantage of investors, that hasn’t been the case. The Mayo Clinic. Duke University. Penn State College of Medicine. They’re among the healthcare elite already using BioNano’s Saphyr to further their research of numerous diseases. As well and not to be discounted either, Wall Street’s actions have also been very agreeable with a sustainable rally despite any dilution concerns.
BNGO Stock Daily Price Chart
Source: Charts by TradingView
Less than a handful of analysts have taken the time to initiate coverage on BNGO stock. That’s hardly surprising given today’s smaller $3 billion mid-cap valuation and shares fetching just 50 to 60 cents as recently as December.
Among Wall Street’s sell side community that does follow the outfit, shares maintain three “buy” ratings, one “hold” and 12-month price target range of 75 cents to $15 a share. Most recently, Maxim’s Jason McCarthy reiterated his “buy” rating following BioNano’s symposium while lifting the firm’s shares from $2 to $14.
Making a Break?
Technically, BNGO shares could be readying to break out of a symmetrical triangle pattern. The consolidation began after last month’s remarkable rally and holds a modest edge for bullish investors as stock moves out of the formation generally favor a continuation of the trend preceding it. Optimistically, that type of reaction could also lead to bullish analyst revisions, increased coverage, and additional fuel to send shares to new relative highs. But BNGO’s triangle has a couple other items working in its favor as well.
Stochastics are favorably oversold, albeit not yet signaling a bullish crossover. But that could change quickly. Second, and as the illustrated daily chart shows, the pattern’s price action has found support off 2018’s former all-time-high. And of extra benefit, the triangle has been reinforced by successful Fibonacci testing tied to a couple key lows within BioNano’s uptrend, which followed a pair of well-received secondaries in BNGO stock.
Bottom-line, bullish investors should put BioNano on the radar for a nearby purchase contingent on shares generating a stochastics crossover and breakout above pattern resistance of $12.50.
As BNGO offers fairly liquid options, I’d also strongly suggest a married put strategy to hedge downside risk while maintaining open-ended upside potential or consider a fully-hedged but always flexible stock collar strategy.
On the date of publication, Chris Tyler holds, directly or indirectly Greyscale Bitcoin (OTCMKTS:GBTC), Greyscale Ethereum (OTCMKTS:ETHE) and Greyscale Ethereum Classic Trust (OTCMKT:ETCG) shares, but no other securities mentioned in this article.
Chris Tyler is a former floor-based, derivatives market maker on the American and Pacific exchanges. The information offered is based on his professional experience but strictly intended for educational purposes only. Any use of this information is 100% the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.