Zomedica Corp (NYSEAMERICAN: ZOM) is continuing to rocket in the market this morning, following up on the tremendous gains we’ve seen out of the stock as of late. In fact, since August, ZOM stock has been on a tear for the top with no signs of slowing.
So, what’s the deal?
In August, the company announced that it would launch its TRUFORMA diagnostics platform on March 30 of this year. That’s a huge step for a company that hasn’t yet generated a penny in revenue. Moreover, not only is the company launching TRUFORMA, it’s expected to make a splash when it does so.
Here’s what’s going on:
Skip to What You Want to Read
- Zomedica Will Launch TRUFORMA Soon
- TRUFORMA Provides an Entrance Into a Massive Market
- Shorts Will Continue to Abandon Ship
- What Analysts Think About ZOM Stock
- Risks to Consider Before Buying ZOM Stock
- Final Thoughts
Zomedica Will Launch TRUFORMA Soon
March may seem like a long way off. However, it’s just around the corner, and it will be a significant month for Zomedica. The company plans on launching TRUFORMA on March 30, going from a clinical-stage biotech to a commercial-stage biotech.
So, what is TRUFORMA?
The product is a pet diagnostics platform that’s designed to diagnose an array of conditions in the point-of-care setting. Importantly, the platform is sensitive enough to pick up on conditions that no pet diagnostics platform could have in the past. Moreover, of the conditions that are picked up by other diagnostics platforms, many are not available in the point-of-care setting, requiring days, or even weeks for results to come back.
ZOM intends on changing all that, and is on the right track to doing so.
TRUFORMA Provides an Entrance Into a Massive Market
Through the year 2021, pet owners are expected to spend a whopping $99 billion on their pets, $2.8 billion of which is expected to be spent in the pet diagnostics market.
That’s a massive market, especially for a small biotech company that’s never generated revenue through the sale of products. On March 30, not only will ZOM become a commercial-stage company, it’s expected to make a splash in a massive market.
Also, considering the company’s market cap, currently sitting well under $300 million, it doesn’t have to take the lion’s share of the market to generate meaningful revenue. In fact, just a sliver of the market could result in meaningful cash flying through the doors for ZOM.
However, it is my belief that over the next few years, TRUFORMA will be found in a large chunk of animal hospitals across the United States and likely around the world. After all, consumers are willing to spend quite a bit of money to keep their pets healthy. By providing TRUFORMA diagnostics, veterinary clinics will be able to give pet owners a confident opinion for treatment, likely driving better results for the animal and its owner, as well as stronger revenues for the veterinary clinic.
I’m not suggesting that ZOM will take a lion’s share of the market, but I also wouldn’t be surprised if its piece of the pie was a massive one.
Shorts Will Continue to Abandon Ship
Considering recent growth, short sellers have been abandoning ZOM stock for some time now. However, there are still a few out there that are working to pressure the stock downward. That isn’t likely to last much longer.
The fact of the matter is that with the commercial launch of TRUFORMA just around the corner, investors have a serious catalyst to look forward to. As we edge closer to this catalyst, shorts will continue to abandon ship, providing further support for price appreciation in the stock.
What Analysts Think About ZOM Stock
According to TipRanks, there’s currently only one analyst covering ZOM stock. However, that analyst has a positive opinion with a BUY rating.
While the price target is set at $0.30 per share, representing a pretty painful downside potential, it’s important to keep in mind that this price target was set prior to the company’s announcement that it would be launching TRUFORMA relatively soon. So, that target is based on a pre-revenue company, not only that’s expected to launch what could become the goose that lays the golden eggs in just a couple of months.
As such, I’m expecting that the price target will be revised upward in a big way as we get closer to the launch date.
Risks to Consider Before Buying ZOM Stock
There is no such thing as an investment with no risk, and ZOM stock is no exception to that rule. Before diving in, consider the following risks:
- An Unproven Business Model. It seems as though all the experts that have checked in on Zomedica have the same opinion I do. TRUFORMA is expected to be a smash hit, driving significant revenue. But that’s a speculative bet. The fact of the matter is that the product hasn’t launched yet, and until it does, we have no idea how the market is going to react to it. If TRUFORMA doesn’t drive the revenue that the investing community is expecting to see, significant declines may be ahead.
- Capital Risk. As a company that hasn’t yet generated a dime from the sale of products, the company has been surviving on cash in the bank. If this cash can’t get it to profitability, it may decide to sell newly-issued shares as a way to raise funds. Should this be the case, dilution will be the result, robbing existing shareholders of value.
- Penny Stock Risks. Finally, ZOM is a penny stock. That means that it comes with increased risk, two of which are outlined above. Another area of penny stock risk to consider is volatility. While the stock has been experiencing a tremendous run for the top, reversals happen fast and should one happen here, it could lead to significant losses.
I want to be very clear about one thing. My opinion of Zomedica stock couldn’t be more bullish. I don’t write risks to scare my readers off. They’re there to ensure that you know everything you need to before diving in.
Even considering the risks, ZOM stock is hard to ignore.
We’re talking about a company with an ultra-small valuation that’s expected to jump into a massive market in just a couple of months. All in all, that’s an opportunity if I’ve ever seen one before!