Bionano Genomics Inc (NASDAQ:BNGO) shares have been sliding again for the past six weeks. After BNGO stock treaded water through much of the summer, investors were hoping for movement. Not downward, though.
However, at this point, BNGO stock is down 47% from its close of $6.12 on Nov. 3. It’s down 55% since the start of the year. And if you look at its all-time high close of $15.57 on February 16, BNGO stock has dropped 79%. So why are investment analysts singing the biotech stock’s virtues?
The February surge in Bionano shares was a classic case of the Reddit effect. BNGO stock suddenly went from a penny stock facing delisting to nearly 3,000% growth in just two months. Then, it crashed. It was a prime example of meme stock behavior.
So why am I now optimistic about BNGO? It’s all about Saphyr, Bionano’s DNA analysis tool. This is shaping up to be a game-changer for the company and a long-term revenue generator. Let’s look at the details, including some impressive numbers from an Oppenheimer analyst.
What is Saphyr?
The heart of the bull case for Bionano Genomics is the company’s Saphyr system. This is an optical genome mapping system. It is highly sophisticated technology, featuring enhanced optics and machine learning to deliver results that outperform current genetic sequencing systems.
The company claims Saphyr is far more sensitive than these systems while delivering results much faster and with a false positive rate below 2%. The system promises to be a dream machine for researchers and health organizations needing to run diagnostic tests.
Bionano has already booked some big wins for Saphyr in 2021. One high-profile announcement was February’s news that Toronto’s University Health Network would be piloting Saphyr for use in cancer diagnostics. As Canada’s largest hospital diagnostic laboratory — performing 25 million tests per year — this was a big deal.
More recent news has also caught the attention of analysts. On Dec. 8, Bionano announced the results of a study using Saphyr conducted by researchers at the University of Texas. The study pitted Saphyr’s optical genome mapping against traditional cytogenomic methods in profiling bone marrow disorder myelodysplastic syndrome (MDS).
The researchers concluded Saphyr was just as accurate as traditional methods, while also being much faster and providing higher resolution results. In fact, it detected clinically significant variations in 18% of the patients that were missed by traditional methods.
This is a pretty compelling vote of coincidence in Saphyr. BNGO stock popped on the news, but has since given that up.
Oppenheimer’s Analysis of BNGO Stock
The results of the University of Texas study weren’t lost on Oppenheimer analyst Kevin DeGeeter. He thinks Bionano is on track to exceed analyst projections for at least 150 Saphyr units to be delivered by the end of the year.
Each of those units is a sale that generates revenue of roughly $150,000. However, the beauty of Saphyr — at least as a revenue source — is the consumables needed for running tests. DeGeeter calculates that each unit will likely generate $110,000 per year in recurring revenue for Bionano.
Based on his analysis, DeGeeter rates BNGO stock as “outperform” with a $14 value.
Other analysts are also bullish on the company. Those tracked by the Wall Street Journal have BNGO rated as a consensus “buy” with an average $12 price target. Even the lowest price target among that group ($10) offers more than 200% upside.
The Bottom Line on BNGO Stock
Bionano shares currently earn a “B” rating in Portfolio Grader. They offer significant long-term growth potential, although there is a risk of continued volatility that may scare off timid investors.
The case for considering shares in this biotech company is driven by the prospects of its Saphyr system. It will generate sales, but even more importantly, it will continue to bring in meaningful revenue on an ongoing basis through consumables.
Analysts agree and feel that over the next year, BNGO stock is set for a recovery. If they’re right, that will mean significant gains for those who buy shares at their current low price.
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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.
