The tech underpinning Bionano Genomics (NASDAQ:BNGO) stock is a cool genomics sequencing device called Saphyr. It claims to do genomic mapping faster, and better, than ever before possible. The machine costs $150,000, but it’s offered as a service for as little as $950 per sample.
Bionano’s third-quarter report showed 141 Saphyr devices had been installed as of the end of September, 24 in the third quarter alone. New hires in the sales department made future prospects look good.
Buy, buy, buy, right? Nope. Sell, sell, sell. Since a speculative spike in February sent the stock to $15.57, it has gone nowhere but down. It closed out November at $3.91 a share. That’s still up on the year, but the trend is not in your favor.
Seeking Value in BNGO Stock
Even at its current price, Bionano is an expensive stock.
Sales for the first three quarters of 2021 were up 250% from a year ago. But they totaled less than $11.7 million. Operating losses were also up 76%, to over $48 million. The company was still putting $6.5 million into research expenses during the third quarter. Sales and general administrative expenses have nearly doubled from a year ago.
Trouble is, if all that is true, why won’t Cathie Woods’ ARK Invest buy in? I checked the ARK Genomic Revolution ETF (NYSEARCA:ARKG) before writing this. It has no investments in BNGO stock. That’s bad. What’s worse is that ARKG shares themselves are down nearly a third since June. They were trading at $63.37 on Nov. 30 from $93.01 in late June.
What investors seem to be saying is: Don’t show us the tech, show us the money.
The Market Reality
I have been pounding the table for two years now on DNA as a programming language. It’s a coming thing.
But devices like the Saphyr aren’t where the money is. Big equipment purchases are carefully considered against hospital and research institution budgets. An institution is going to do a lot of tests before it makes the capital commitment. Even after you buy the Saphyr system, you’re going to be spending $450/test for reagents. In the near term, it’s Bionano’s services business that holds the most promise. Even at $1,000 per test, it takes a lot of tests to justify a market cap of $1.15 billion.
All the analysts tracked by TipRanks say “buy.”. The problem is there are only three of them. The analysis to me looks one-sided. Analysts are in the business of selling stock. A legitimate company like Bionano isn’t going to have people talking it down until there’s real news.
That’s why writers like our Joseph Nograles are advising caution. Speculators are fleeing the sector. Even the current stock price makes no sense, from the point of view of value. Hope can be found in some recent hires from Illumina (NASDAQ:ILMN), a mature genetics testing outfit with a market capitalization of nearly $58 billion and positive earnings. But that’s just hope.
The Bionano Bottom Line
Bionano is not going to be a quick hit. It’s not going to make you rich in the next year unless there’s another flood of speculation in the sector.
But this is a solid technology with good growth prospects. If you like the sector, keep an eye on it. Keep an eye on exchange-traded funds like ARKG, as well. When the ETF makes a decisive move higher, that’s when you can look at Bionano. Until then I think you’re overpaying.
On the date of publication, Dana Blankenhorn held no positions in any securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Dana Blankenhorn has been a financial and technology journalist since 1978. Just in time for the holidays he has a collection of COVID-19 stories at the Amazon Kindle store. Write him at firstname.lastname@example.org or tweet him at @danablankenhorn. He writes a Substack newsletter, Facing the Future, which covers technology, markets, and politics.