Bionano Genomics (BNGO - Get Rating) is a life science instrumentation business. To be more specific, BNGO operates in the area of genome analysis. BNGO’s products include integrated primary/secondary software, automated imaging instruments, nanochannel chips, and reagents that are application-specific.

Located in lovely San Diego, BNGO was founded in 2003. BNGO’s novel gene diagnostic technology is certainly generating plenty of attention from Wall Street traders. However, those who take a close look at BNGO’s long-term chart are rightfully concerned that the stock might be overvalued.

Has BNGO climbed too high too quickly? Will profits be taken off the table, sending the stock lower in the weeks and months ahead? Let’s take a look at whether BNGO has the merits necessary to justify a position in your portfolio.

BNGO Points of Note

BNGO was trading above $8 in April, dropped down to $5.27 by the middle of the month, and now trading around $6.87. However, if you rewind back to 2020 and even the first month of 2021, you will find BNGO was a penny stock. BNGO started ascending toward the end of 2020 and continued the trend through the start of the year, climbing to $7 in early January and moving up to $12 by late January. In fact, BNGO traded above the $15 level by mid-February.

BNGO has a beta of 2.14, meaning it is more volatile than the market. BNGO’s 52-week high is $15.69, and the stock’s 52-week low is a mere 34 cents. The question is whether BNGO is anything more than a “flavor of the month” stock. The fact that BNGO has dipped 65% from its February high is certainly concerning. 

Furthermore, the short-sellers are lining up to bet against the stock moving even higher. Keep in mind that BNGO’s service and product revenue dipped more than 15% on a year over year basis, sliding to a surprisingly low $8.5 million due to the ongoing pandemic creating challenges for laboratory testing procedures. Making matters worse is the company’s operating losses jumped from $25.9 million to $38 million due to increased spending in research and development.

There is a chance BNGO’s cytogenetic testing device, referred to as the Saphyr System, will successfully scan for chromosome abnormalities within the nuclei of cells, mapping the entirety of patient genomes, ultimately ameliorating the quest to detect disorders. BNGO’s device is unique in that it permits integrated testing in which diverse samples ranging from cultured cells to blood, tissue biopsies, and bone marrow aspirates are analyzed. All in all, BNGO will market this solution to 2,500 cytogenetic labs, totaling an aggregate market of slightly over $3 billion.

BNGO According to Analysts

Analysts are bullish on BNGO, setting an average target price of $14.33. Of the three analysts who cover the stock, two consider it a Strong Buy, and one considers it a Buy.

BNGO POWR Ratings

BNGO has an overall grade of F, which translates into a Strong Sell in our POWR Ratings system. The stock has F grades in the Quality and Stability components and D grades in the Sentiment and Value components. Investors who would like to find out more about how BNGO fares in the Momentum and Growth components can click here.

Out of 58 publicly traded companies in the Biotech industry, BNGO is ranked 55th. Click here to see the top-ranked stocks in this industry. 

Is BNGO Worthy of a Place in Your Portfolio?

BNGO is not deserving of a place in your portfolio. The stock is ranked in the bottom five of its industry. The majority of BNGO’s POWR Ratings components have D grades or worse. Investors should wait until BNGO improves in the POWR Ratings before establishing a position in the stock. 

BNGO shares were unchanged in after-hours trading Thursday. Year-to-date, BNGO has gained 114.61%, versus a 12.72% rise in the benchmark S&P 500 index during the same period.

About the Author: Patrick Ryan

Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management. More...

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