As has been the case for several months, Zomedica (NYSEAMERICAN:ZOM) continues to tread water. ZOM stock, a pet diagnostics play and reputed meme stock, has struggled to bounce back after big declines last spring.

Said decline came right after shares, trading for well under $1 at the start of 2021, zoomed to as much as $2.91. The move may or may not have been the product of Reddit traders stampeding into it with full force.

But I wouldn’t put too much focus on what played out nearly a year ago. Don’t buy ZOM stock with the hopes of another unexpected flurry that bids it up for unclear reasons. Instead, you should give this stock a closer look for more substantial fundamentals.

While it’s not without its risks, shares still have a strong chance of bouncing back. A key issue that has delayed the rollout of its flagship product, pet diagnostics platform Truforma, is starting to resolve.

In addition, its recent mergers and acquisition (M&A) wheeling and dealing may be a sign that another catalyst is set to emerge.

ZOM Stock and Its Recent Results

On Nov. 12, Zomedica reported its third quarter 2021 financial results. Like last quarter, the company reported minimal sales of $22,514.

Increased selling, general and administrative (SG&A) expenses outweighed decreased research and development (R&D) costs. As a result, its $6.3 million loss for the quarter was up moderately from the $5 million loss posted in the prior year’s quarter.

In short, there was nothing too surprising in this earnings release. Given that it’s still facing supply-chain headwinds, it makes sense why sales have not gone up, even as its Truforma system is now available for sale.

These higher losses make sense when you consider the company is building the sales needed to successfully market Truforma.

Based on how its shares have performed post-earnings, it’s clear the market has come to the same conclusion. That’s not exactly good news for ZOM stock. But at the same time, it’s hardly cause to push shares to a substantially lower price.

For now, chances are investors will feel most comfortable paying 50 cents per share for Zomedica. Again, though, the key issue holding it back is starting to resolve.

As this plays out, improved results — and a shift in sentiment — are likely ahead.

It May Just Be Darkest Before Dawn

So far, Truforma hasn’t brought in much revenue for the company. That’s played a big role in why the market has soured on ZOM stock. However, taking a closer look at the situation, it’s clear that Truforma hasn’t exactly been a flop.

Why? The company’s game plan was to sell this system to veterinary practices using a “razor and blade” sales strategy. In other words, it plans to make money not from device sales, but from the sale of test assay cartridges that are used with the product.

As I mentioned last month, this strategy has hit a snag. Supplier delays have left them short on cartridges, which contributed to limited interest among buyers.

However, this problem appears to be clearing up. Based on statements made in the earnings release, it may be making progress with its supplier issues.

Zomedica expects to have a wider selection of assays available for use starting next year. This bodes well for both regular sales and a program launched to incentivize potential buyers: its Customer Appreciation Program (CAP).

Through this program, Zomedica provides the Truforma instrument to customers at no charge. In exchange, end users agree to buy assays directly from the company. So far, 144 veterinary practices have signed up.

This should lead to much better results in the quarters ahead as these new users put the device to work. When the first signs of success start showing up in its financial results, we could see another liftoff for ZOM stock.

The Verdict on ZOM Stock

Above, I focused on the main catalyst at play with Zomedica. But besides the commercialization of Truforma, there’s another catalyst for shares: success with its M&A strategy.

You may recall that last month, Zomedica announced the purchase of Pulse Veterinary Technologies. Still flush $271 million in cash from its capital raises earlier this year, it has the ability to pursue additional bolt-on deals.

Additionally, CEO Larry Heaton has an extensive background in running and building medical device companies. Heaton may be able to grow this niche veterinary business in the same way.

Keeping in mind this is a risky play, don’t let the market’s disinterest in ZOM stock keep you away. Take a look at the details and decide whether its a speculative — but high-potential — play worth considering.

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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. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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