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After surging to an all-time high early in 2021, Bionano Genomics (NASDAQ:BNGO) stock is back down among the penny stocks. The first thing I do when I see a penny stock is look for a reason why. No, I’m not a perma-bear, I just adhere to the advice that many penny stocks are that way for a reason.
Source: Dennis Diatel / Shutterstock.com
However, in the case of Bionano, I see a company with growing revenue and a product that is gaining adoption. Still, this is a small company. And BNGO stock has been a falling knife for over a year. This is not for investors with a low risk tolerance. But as I wrote above, if you can buy crypto, then you shouldn’t be afraid to take a long position with a company on the leading edge of the genomic trend.
BNGO Stock Has Lost Its Meme Mojo
According to some sources, Bionano’s stock shot higher in early 2021 in hopes that the company’s flagship Saphyr system would be able to give researchers insight into the pathogenesis of the novel coronavirus. It’s also fair to say its low price allowed BNGO stock to get caught up in the meme stock movement.
However, those days are long since over. So is there an opportunity for BNGO stock? It can be easy to look at a penny stock and wonder, “Why bother?” However, investors could say the same thing about cryptocurrency. Yet, that didn’t slow down the crypto craze. And even now, with crypto prices having dropped dramatically, there is a belief that a turnaround is only a matter of time.
That may be true. But if investors are going to take a flier on a risk/reward equity, BNGO stock may be a viable alternative. The company is growing its revenue as sales of its flagship Saphyr system exceed the company’s own internal estimates. And the company is getting ready to launch the next generation of the Saphyr system in 2023.
A Moonshot for a Cure
In his State of the Union address, President Joe Biden once again advocated for his signature moonshot to find a cure for cancer. If Congress provides funding for such an effort, it could be a catalyst for Bionano. It’s Saphyr system is “a genome imaging tool for high-speed, high-throughput structural variant detection and analysis with exceptional sensitivity and specificity.”
That’s a lot of words to digest. But as it relates to cancer, the company believes that a range of conditions can be detected through structural variations in a patient’s DNA. And one of those conditions would be certain types of cancers.
Almost every person reading this article knows of someone who has been afflicted by cancer. And for many of us the list is too long to count. Cancer treatment today is truly astonishing. Many individuals are cancer survivors. Others are living or have lived far longer than in previous generations.
One universal key to a patient’s prognosis and treatment is early detection. That’s where the Saphyr system comes in. Because of the pandemic, we’ve all received at least a high school level course in virology. And we know of the prevalence of variants. Many cancers have variants depending on an individual’s DNA. Although the product is in its infancy, the Saphyr system is already proving itself effective in finding more DNA variants than other existing research tools.
Further Growth Is the Key
In its last earnings report, Bionano reported that sales of its Saphyr system increased by 69% on a year-over-year basis. That means the company installed 23 new systems in the quarter. This also meant that BNGO beat its internal forecast to install 150 systems for the full year (they delivered 164).
And the company’s quarterly revenue came in at $6.3 million, a 58% YOY increase. Full-year revenue showed an even more impressive gain. At $18 million, the company posted a YOY gain of 112%.
Like several stocks, Bionano looks undervalued or properly valued depending on what metric you use. This isn’t a stock to go all in on, but taking a part of your crypto portfolio and moving it to BNGO stock may be a worthwhile investment for investors with a long time horizon.
On Penny Stocks and Low-Volume Stocks: With only the rarest exceptions, InvestorPlace does not publish commentary about companies that have a market cap of less than $100 million or trade less than 100,000 shares each day. That’s because these “penny stocks” are frequently the playground for scam artists and market manipulators. If we ever do publish commentary on a low-volume stock that may be affected by our commentary, we demand that InvestorPlace.com’s writers disclose this fact and warn readers of the risks.
On the date of publication, Chris Markoch did not have (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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