It’s Time to Take Profits on Volatile BioNano Genomics Stock and Buy It Back on Dips

Genomics and medical technology group BioNano Genomics (NASDAQ:BNGO) has recently been sizzling. Year-to-date, BNGO stock is up around 200%. Put another way, the proverbial $1,000 invested in the shares at the start of 2021 would now be worth $3,000.

a visualization of DNA in a vial

Source: Connect world /

San Diego-based BioNano Genomics provides a platform to analyze the long segments of genomic DNA. It offers proprietary nanochannel chips, imaging instruments, laboratory equipment, as well as software.

Genomics studies a person’s genes (the genome) and how they react to one another as well as to environmental conditions. Genomic medicine uses this biological information with the aim of improving an individual’s health.

The importance of genomics has become more significant in recent weeks. The COVID-19 Genomics UK Consortium (COG-UK) announced that it discovered a new variant of SARS-CoV-2. Other variants of the virus have also been identified in different countries, thanks to genomic sequencing.

Therefore, in the long-run, we can expect the field to remain a hot topic among scientists as well as investors. However, with increased market volatility in the past few days, BNGO stock has also come under pressure. Today’s article discusses what investors could expect from the shares in the coming weeks.

Genomics Gets Significant Attention

BNGO stock was down around 50% for much of 2020 before shareholders began seeing impressive gains in the last few days of December. Especially the increase in January was due to a showcasing of the group’s technologies related to the autism spectrum, several cancer types, and also coronavirus.

BioNano presented ways to identify why certain patients might suffer Covid-19 symptoms more than others. BioNano’s main product, the Saphyr system, can identify genome variation faster than any other system.

There are several companies bigger than BioNano in this field, such as Illumina (NASDAQ:ILMN), Pacific Biosciences of California (NASDAQ:PACB), and the U.K.-based Oxford Nanopore. None of these firms offer systems that can detect large-scale structural variations as Bionano Genomics does. BNGO stock has benefited from this competitive edge.

Although the scientific community likes the Saphyr system, BioNano reported losses of $10.8 million in the last quarter. Revenues have also decreased year-on-year since 2019. Poor quarterly metrics might be one of the main reasons that Bionano had two offerings in January, raising a cumulative of $330 million.

The company estimates that the potential market reach of the Saphyr might be between $2.6 billion and $3.8 billion. This is a forward-looking statement. BNGO stock’s current market capitalization stands at $1.8 billion. The market cap is a reflection of the valuation of the business.

BioNano is not a profitable company. Thus, more offerings to raise capital could be needed, diluting the share price. If the business turns to debt financing instead, then the burden of interest payments also needs to be considered.

The Bottom Line on BNGO Stock

Genomics research should continue to impact our lives in the coming years. Therefore, the Street will likely focus more on this important field. However, we have to remember the niche nature of this sector, too.

Becoming a large company with the size or scale that some BNGO stock investors would like to see could take a very long time. The company would need to see sustained revenue growth.

Ultimately, further growth of BNGO stock will depend on what we hear from BioNano in the coming months. In other words, so we may not see much more increase in the share price any time soon unless the company announces fundamentally vital news.

If you currently hold paper profits, you might consider ringing the cash register. If you are interested in buying into BNGO stock, you might consider investing around $7.50.

How about investing in the potential growth of genomics without committing full capital into one stock? You could potentially consider buying an exchange-traded fund (ETF). Examples include the ARK Genomic Revolution ETF (NYSEARCA:ARKG), the Global X Genomics & Biotechnology ETF (NASDAQ:GNOM), and the iShares Genomics Immunology and Healthcare ETF (NYSEARCA:IDNA).

On the date of publication, Tezcan Gecgil did not have (either directly or indirectly) any positions in the securities mentioned in this article.

Tezcan Gecgil has worked in investment management for over two decades in the U.S. and U.K. In addition to formal higher education in the field, she has also completed all 3 levels of the Chartered Market Technician (CMT) examination. Her passion is for options trading based on technical analysis of fundamentally strong companies. She especially enjoys setting up weekly covered calls for income generation. 

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