Bionano Genomics Inc (NASDAQ: BNGO) is a life sciences instrumentation company in genome analysis. It is engaged in developing and marketing the Saphyr system, a platform for ultra-sensitive and ultra-specific structural variation detection that enables researchers and clinicians to accelerate the search for new diagnostics and therapeutic targets and streamline the study of changes in chromosomes.

Key Highlights 

• Elevated Net Losses: Despite clocking healthy growth in revenue by 112.0% to USD 4.7 million in Q3FY21, BNGO failed to minimize its net loss, which increased to USD 20.8 million, compared to USD 10.8 million in pcp. This exhibits the pressure on the company.
• Clocked Higher Operating Expenses: With continued investment in sales and marketing, as well as research and development, the company's operational expenses grew to USD 21.8 million, up to USD 10.9 million or 99.1% from USD 11.0 million in Q3FY20.
• Negative Cash Flows: For 9MFY21, the company reported cash used in operating activities of USD 46.3 million, higher than USD 26.2 million in the previous corresponding period. We believe this was primarily due to net losses which occurred in the period.

Source: Company

• Lower Margin Profile v/s Industry: In Q3FY21, the company failed to maintain its pace and witnessed lower performance across the operating matrix. The company is clocking negative margins on multiple fronts, exhibiting operational pressure.

Financial overview of Q3FY21 (in USD)

Source: Company

• The company announced its quarterly result, wherein it posted total revenue of USD 4.7 million, a surge from USD 2.2 million in pcp. The growth was supported by both of the company's revenue segments.

• Total cost of revenue jumped to USD 3.5 million, from USD 1.5 million in pcp.

• The company's operating expenses increased by 99.1% to USD 21.8 million against USD 11.0 million in pcp. Higher selling, general and administrative expenses, and higher R&D expenses were the main reasons.

• Primarily on the back of the above-discussed rationales, the company's net loss increased to USD 20.8 million, compared to USD 10.8 million in pcp.

Risks Associated with Investment 

Because the corporation is losing money from its current activities, new capital must sustain its growth ambitions. Furthermore, any delays in regulatory clearances would harm the company's overall success.

Stock Recommendation

In Q3FY21, the company recorded a positive topline but failed to maintain the trend in its bottom line. Furthermore, its operations have been hampered by an increase in input costs due to the new acquisition. In addition, the management stated that the travel limitation imposed on account of COVID-19 hurt the company's operations and that further restrictions would represent a threat to its prospects. The stock of BNGO declined ~38.98% and ~41.11% in the last one month and six months, respectively. It closed below the immediate support levels of 50-days and 100-days simple moving averages (SMA), respectively, indicating a bearish pattern. Hence considering the above facts, we recommend a "Watch" rating on the stock at the closing price of USD 3.71 on December 02, 2021.

One-Year Technical Price Chart (as on December 02, 2021). Source: REFINITIV, Analysis by Kalkine Group

*The reference data in this report has been partly sourced from REFINITIV.