NeoGenomics Stock Surged But Technicals Point To A Pullback

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  • NeoGenomics share price surged hard after strong results.
  • The company expects its annual revenue will be between $650M and $660M this year.
  • It is also narrowing its cash burn and working to monetize its pharma business.

NeoGenomics (NEO) stock price popped sharply this week after the company published strong financial results. It soared to a high of $16.50, its highest point since December 29th. It has soared by more than 20% from its lowest point this week.

Strong financial results

NeoGenomics, a fast-growing company that offers cancer diagnostic and other pharmaceutical services, published strong financial results this week. In a statement, the company said its total revenue jumped by 12% YoY in the fourth quarter to $156 million. This surge was mostly because of its clinical test volume.

Most importantly, NeoGenomics continued to focus on profitability as its EBITDA soared by 900% to $9 million. Clinical services revenue soared to $130 million. 

The company also provided a robust forward guidance in which it expects its revenue to soar to between $650 million and $660 million. Its EBITDA is expected to come in at $24 million.

Further, NeoGenomics has a strong balance sheet with over $415 million in cash and marketable securities. It is also reducing its cash burn and is in a good state to manage its upcoming convertible noted due in 2025.

Reducing cash burn will likely help the company deal with its long track record of dilution. In the past few years, it has increased the number of its outstanding share count from 95 million in 2019 to over 127 million. This explains why the stock is still 90% below its all-time high.

In the earnings call, the management noted that the cash burn will likely end this year as it expects to start producing cash in 2025. The other likely catalyst for the company is how it will monetize its vast troves of data in its pharma division. In a statement, Chris Smith, the CEO said:

“We’re expanding now the pharma and the informatics sales force because we feel like there’s great growth opportunities there but we felt like we were kind of ride the ship first.”

NeoGenomics stock price forecast

NeoGenomics stock

NEO chart by TradingView

Turning to the weekly chart, we see that the NEO share price bounced back after it dropped to the key support at $13.81. This was a notable level since it was along the lower side of the ascending channel which is shown in red.

The NeoGeonomics share price has remained below the 50-week and 100-week Exponential Moving Averages (EMA). That is a sign that bears are still in control.

Therefore, in this case, there is a likelihood that the stock will have a bearish breakout in the longer term. If this happens, the key point to watch will be at $10. On the flip side, there is a possibility that it will rise and retest the upper side of the channel at $20. 

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