Zomedica (NYSE:ZOM) is a stock that is absolutely on fire right now. Indeed, ZOM stock has provided investors with a year-to-date return of 880% at the time of publication.
However, if you’re not familiar with the company, you may be wondering why. Let’s take a look at the catalysts that led to this stock’s tremendous momentum right now.
What Does Zomedica Do?
Zomedica is a provider of multi-diagnostic tools used by veterinarians. In March, the company is expected to release its TRUFORMA diagnostic tool. This tool, developed in partnership with Qorvo (NASDAQ:QRVO), relies on proprietary Bulk Acoustic Wave technology. Importantly, this technology is currently in use, with applications in the aerospace and telecommunications markets.
Zomedica appears to be in the final stages of development and approval for TRUFORMA. This tool is aimed at providing quick and effective in-office diagnosis of adrenal and thyroid disorders commonly found in canines and felines.
According to Zomedica’s President Stephanie Morley, the company believes “that the TRUFORMA™ platform has the potential to establish the Company as a leader in point-of-care diagnostic testing of companion animals in veterinary medicine.” Indeed, investors appear to be equally enamored by the growth prospects of this company’s products.
ZOM Stock Listing No Longer in Jeopardy
One catalyst supporting ZOM stock’s parabolic rise of late has been the regaining of the company’s listing compliance. In a letter to shareholders on Jan. 18, CEO Robert Cohen outlined the fact that as of Jan. 13, the stock had been removed from the list of NYSE American noncompliant issuers on the exchange’s website.
This reinstatement is broadly bullish for investors and has brought a wave of retail investors to the party. Indeed, ZOM stock has become a less-discussed, but evidently popular, stock with various traders on the r/WallStreetBets Reddit forum for this reason, among others.
Investors Bullish on Zomedica for the Long Term
ZOM stock is getting a lot of attention prior to its estimated earnings report date on Feb. 24. The type of parabolic move we’ve seen in this stock typically takes place post-earnings.
Regardless, one of the indirect benefits of this stock-price spike is the cash infusion ZOM stock has received as a result of warrants converting to stock. The company now has around $90 million in liquidity, which management thinks should last a couple years. Accordingly, product development and operational costs are seemingly covered for the near term. Thus, investors are increasingly focuseing on the long-term potential of Zomedica’s niche product offering.
Zomedica has stated it believes the company is in a good position to capture a decent chunk of the diagnostics segment of the global companion-animal market. According to the company, this market is estimated to reach $2.8 billion in 2024. Additionally, the growth rate in this sector is attractive. Projections are for double-digit annual growth for the foreseeable future. This sector saw a 19% increase in U.S. revenue on a year-over-year basis from July 2019 to August 2020.
Go-To Market Strategy Striking a Chord With Investors
In addition to announcing a Mar. 30 launch date for the company’s TRUFORMA product, Zomedica recently announced a distribution partnership with Miller Veterinary Supply. This agreement limits distribution to the Eastern U.S., but has provided validation for the company’s go-to market plan.
Furthermore, commercialization plans appear to be on track for Zomedica to meet its Mar. 30 target date. The company plans on focusing on a limited target market initially, reassessing performance along the way. Plans for expansion to additional markets toward the end of 2021 appear to be in place, should this product perform to the company’s expectations in its initial release.
ZOM stock is an interesting speculative play right now for investors bullish on growth in the small-cap space. The company has an interesting proprietary niche product in a growing sector.
That said, Zomedica does have a number of competitors in this space and is still in the final stages of its product-development process. How this product performs when it is brought to market remains to be seen. There are a lot of question marks with this stock, and investors should remain cautious with respect to ZOM stock’s current valuation.
ZOM stock is approaching a market capitalization equivalent to the total addressable market Zomedica’s management team has identified.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article.