Bionano Genomics (NASDAQ:BNGO) has announced that it will be reporting first-quarter 2021 results on May 13. BNGO stock caught fire at the end of 2020, peaking with a $15.57 close on Feb. 16. With shares currently trading for around one quarter of that February high, is now the time to make a move? Or, are you better off waiting until after the company reports those Q1 earnings?
Here’s another factor to consider. Even though BNGO currently earns an ‘A’ rating in Portfolio Grader, it does have the stigma of having been an infamous “Reddit” stock.
In other words, the Bionano story isn’t a simple or straightforward one. I’ll attempt to unpack the current situation to help you decide whether now is the time to snap up BNGO shares, if you should wait until after that earnings report or if this is a stock that you may not want in your portfolio.
The Reddit Effect
Let’s look at the Reddit effect first. Any time a stock dramatically spikes the way BNGO stock did last year, the first thing to look for is retail investors. And sure enough, they were a huge part of the Bionano story. Over the three months prior to its Feb. 16 close, BNGO stock gained a spectacular 2,953%.
Last November, this was a penny stock. It was in danger of being delisted. Retail investors took to Reddit and helped to drive that massive gain. The company then leveraged the gain to sell shares. The resulting dilution netted Bionano $230 million, but was a big part of the reason why the value of BNGO stock began to slump.
The Reddit effect continues to be a factor; however, don’t make the mistake of thinking this is a stereotypical retail “gambling” stock.
What About Saphyr?
Saphyr is Bionano’s flagship product, an optical genetic mapping system. Aimed at researchers and clinicians, it’s designed to outperform sequencing-based technology in genetic mapping, with greater accuracy and greater speed. Saphyr has potential to be ground-breaking for purposes like cancer detection.
The company is beginning to sell more of the units, and these sales also generate ongoing revenue through purchase of consumables. Its most-recent high-profile sale was to the U.K.’s National Health System (NHS), which announced in April that it is adopting Saphyr for use in two large laboratories.
The Lineagen Acquisition
Last August, Bionano acquired Lineagen Inc. The Utah-based company provides diagnostic services that can identify neurodevelopmental disorders, including autism. Buying Lineagen brought in a revenue stream ($1.1 million of Bionano’s total of $4 million revenue in the fourth quarter). It brought experienced staff into the Bionano fold. But it also offers Bionano the opportunity to pitch customers who are already working with Lineagen on the company’s Saphyr system.
Or, as Bionano’s CEO noted in the announcement of the Lineagen deal, the move: “[it] accelerates our efforts to bring Saphyr to clinical testing within a CLIA environment by adding essential skills and relationships with physicians and payors in place at Lineagen.”
The Bottom Line on BNGO Stock
So, what is the bottom line on Bionano?
The company was talked up on Reddit, boosting BNGO stock to unreasonable levels, then took advantage of that situation to issue more shares. Investors who held stock at the time may have been less than thrilled to see their holdings diluted, but that doesn’t affect you now. Except that it helped to push the stock price down while strengthening the company’s balance sheet. In fact, as part of its Q3 earnings report in March, the company’s CFO said: “As we begin 2021, Bionano’s balance sheet is in its strongest position ever.”
In its previous quarter, Bionano beat analyst expectations for both revenue and earnings per share. If that were to happen again on May 13, it could be the catalyst that kicks off the recovery in BNGO stock.
Regardless of what happens, with a strong balance sheet, growing success with Saphyr and the acquisition of Lineagen, Bionano stock is in a position favorable to long-term growth. Even if the earnings are a miss and BNGO slips further, I doubt it will stay down for long.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
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