The last time I weighed in on Zomedica (NYSEAMERICAN:ZOM), I said, “While there are plenty of reasons to be bullish on [ZOM Stock] for the long run, there is also reason for near-term caution.”
That was on Feb. 24, as ZOM stock traded at a high of $2.19. It’s now at $1.58.
Around that time the company, which makes point-of-care diagnostic products for cats and dogs, had just rallied about 2,900% on two key catalysts.
One, the pet care industry was howling.
“Pet owners are spending billions on premium-quality foods, state-of-the-art health care, insurance policies, luxury services and more. It’s causing a new pet care economy to emerge that could reach $203 billion by 2025,” noted Michael L. Sapir, CEO of ProShare Advisors LLC in a company press release.
Two, the company was nearing the commercialization of its Transforma diagnostic tool. Even after all of that, I believe the stock could double if its product performs well with veterinarians.
The Animal Diagnostics Market Could be Worth up to $5.38 Billion
We already know millions of people treat their pets like their own flesh and blood. Folks are spending gobs of money on top-of-the-line toys, food, clothing, healthcare. In 2019, they spent nearly half a billion dollars on Halloween costumes, if you can believe that. So it comes as no shock the veterinary diagnostics market could reach $5.38 billion by 2027, according to Meticulous Research. After all, for many of us, we hear one little yelp and we’re banging down the vet’s door for help.
In addition, according to Andrew J. Rosenfeld, medical director of Abaxis Global Diagnostics:
“Clinicians now have the ability to evaluate organ function, electrolytes, complete blood count, blood gas, and specific infectious components within minutes of the patient coming into the office,” Dr. Rosenfeld said. “This allows for quick diagnosis and treatment of the patient. Earlier evaluation allows the veterinarian to treat more quickly and effectively, reducing client expense and increasing success in treatment.”
Truforma Could be a Game Changer for the Industry
Veterinarians can use the Truforma platform to identify any thyroid or adrenal problems in your dog or cat. Better, instead of shipping your pooch’s blood tests to an outside lab, your vet’s office can use the platform to run all the necessary tests right then and there. After all, the last thing a pet owner wants to do is wait days on end for results needed immediately.
In addition, according to one contributor on Seeking Alpha, “The TRUFORMA system expansion would represent the first non-infectious panel fully available at the point of care and able to assess the function of the pancreas, proximal small intestine, and distal small intestine to identify the source of the distress.”
However, as with any stock or new product, there’s reason for caution, especially with a low-priced stock like ZOM.
For one, as of Dec. 31, 2020, the company had no revenue. It also posted a net loss of about $16.9 million, as compared to a loss of $19.8 million in 2019. Two, no one has any idea how well the company’s platform will perform with veterinarians, as InvestorPlace contributor Mark Hake has pointed out.
Look, it’s very easy to get caught up in the excitement of a potential boom. But don’t jump the gun. Wait to see how the product does with veterinarians first before investing gobs of money. Should the product do well with that group, then yes, it could double, even triple with patience.
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On the date of publication, Ian Cooper did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Ian Cooper, a contributor to InvestorPlace.com, has been analyzing stocks and options for web-based advisories since 1999.