Bionano Genomics, Inc. (BNGO - Get Rating) is a genome analysis software solutions provider. The company offers Saphyr, a sample-to-result solution for structural variation analysis. BNGO offers diagnostic services to physicians specializing in medical management for individuals with genetic conditions.

The company possesses technical potential. However, it still needs to bolster its consumables revenue through the growth of its installed machine base. In the third quarter, the company topped analysts’ revenue estimate of $6.79 million by 6.3%.

However, its loss widened during the quarter. Moreover, for the nine months ended September 30, its cash and cash equivalents declined 80% year-over-year to $28.17 million.

The stock has gained 32.9% over the past six months but has lost 17.8% over the past five days to close the last trading session at $2.22. It is down 25.8% year-to-date.

Here are the factors that could affect BNGO’s performance in the near term:

Widening Losses

For the fiscal third quarter ended September 30, BNGO’s total revenue increased 55.1% year-over-year to $7.22 million. However, its net loss widened 53.3% from the prior-year quarter to $31.81 million. Net loss per share rose 57.1% from the prior-year period to $0.11.

Stretched Valuation

In terms of forward EV/Sales, BNGO is trading at 20.50x, 430.2% higher than the industry average of 3.87x. The stock’s forward Price/Sales multiple of 24.14 is 469.6% higher than the industry average of 4.24. In terms of trailing-12-month Price/Book, it is trading at 2.36x, 15.3% higher than the industry average of 2.04x.

Analysts Expect Bottom Line to Deteriorate

Analysts expect BNGO’s EPS to decline 31.3% from the prior-year period to a negative $0.11 in the fiscal fourth quarter (ending December 2022). Likewise, the consensus EPS estimate for the fiscal year 2022 of a negative $0.44 reflects a worsening of 67.3% year-over-year.

Poor Profitability

BNGO’s trailing-12-month gross profit margin of 16.91% is 69.2% lower than the industry average of 54.85%. Its trailing-12-month levered FCF margin of negative 218.05% compares to the industry average of negative 2.82%.

Its trailing-12-month ROTC and ROTA of negative 23.91% and 36.10% compare to their respective industry averages of negative 21.95% and 31.29%.

POWR Ratings Reflect Bleak Prospects

BNGO’s POWR Ratings reflect the company’s bleak outlook. The stock has an overall F rating, equating to a Strong Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. BNGO has a Quality grade of F, in sync with its poor profitability. It also has an F grade for Stability, consistent with its five-year beta of 2.26.

BNGO has a D grade for Value, in sync with its stretched valuation.

In the 379-stock Biotech industry, it is ranked #375. The industry is rated F.

Click here to see the additional POWR Ratings for BNGO (Growth, Momentum, and Sentiment).

View all the top stocks in the Biotech industry here.

Bottom Line

BNGO’s low profitability and widening losses look concerning. Moreover, analysts expect its loss to widen further in the current year. As the broader market faces recessionary fears, which could affect the growth of the biotech sector, BNGO might be best avoided now.

How Does Bionano Genomics, Inc. (BNGO) Stack up Against Its Peers?

While BNGO has an overall POWR Rating of F, one might consider looking at its industry peers, Vertex Pharmaceuticals Incorporated (VRTX - Get Rating) and United Therapeutics Corporation (UTHR - Get Rating), which have an overall A (Strong Buy) rating, and Otsuka Holdings Co., Ltd. (OTSKY - Get Rating) and Amgen Inc. (AMGN - Get Rating), which have an overall B (Buy) rating.

BNGO shares were trading at $2.21 per share on Wednesday afternoon, down $0.01 (-0.45%). Year-to-date, BNGO has declined -26.09%, versus a -14.75% rise in the benchmark S&P 500 index during the same period.

About the Author: Anushka Dutta

Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research. More...

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