Havent posted here in a while and have been looking at this as a good short target since Feb. but here’s the low down:
Zomedica is a thinly covered stock that operates in the veterinary diagnostics space. It went from trading at $0.07 (<$100M market cap) in November to $2.91 (~$2.8B market cap) in Feb.
The company just launched its first product. Its consensus rev estimates have come down since late last year. Its bump up in stock price is due to its becoming a meme on retail stock forums. There are basically three big players in that space (IDXX - ~80% market share, HSKA - ~10% market share, ZTS - ~10% market share via Abaxis), and they provide the majority of the bread and butter diagnostic tests in vet clinics. ZOM was trading above HSKA earlier this year. Their focus is on niche markets in veterinary diagnostics. Its hard to see them really having a value that comes close to HSKA, even if they were super successful, got super high adoption etc. Theres only so much operating leverage they can manage and the other players already have decent margins.
Valuation: Probably closer to where it was late last year, ~$100M, plus $174M they raised in Feb while the stock price was high (good move). So the total value is <$300M. Current market cap is ~$950M, so this represents ~66% upside. Due to frothiness I think 50% is a good amount to try to capture. I dont have a time estimate but its dropped significantly over the past couple months. I consider this a low risk short, but it could bump up again. That said its just so over valued that it’d be safe to ride out any volatility.
Risks are primarily volatility. Even if the tests got massive uptake by corporate vet chains thats probably not for a ways out and I dont think its high likelihood. As mentioned the indications theyre going after are just niche things, and the corporates are already locked in to long term contracts with the other three big players in the space.