I've recently discussed two of my top picks for 2020, a small biotechnology name with a good chance of being taken over and a technology company on the leading edge of new developments in the cloud.
A third stock that I believe will do well in 2020 is a sleeper name that has done very poorly since its IPO this past June.
Personalis (PSNL) is a growing genomics company that focuses on "providing comprehensive molecular data about each patient's cancer and immune response."
Currently the company's biggest client is the Veterans Administration. Personalis recently announced a $38.1 million order from the VA's Million Veteran Program. The VA contract produces about half of the company's revenue so this solidifies analyst estimates and sets the stage for upside. In its most recent quarter revenue grew by 47%.
This relationship with the VA is likely to build but what will move the stock in 2002 is its NeXT platform. This platform will be the first that tests for all 20,000 or more cancer genes. This is a potential $5 billion market and creates a long-term, ongoing relationship with customers that use the testing service. Personalis already announced its first customer, which is Merck of Germany.
A good explanation of Personalis' business can be found in the transcript of the second quarter earnings report.
This is not a trade based on a great technical setup. The stock has been beaten up badly due to the poor response to certain IPOs, tax-loss selling and the expiration of the lock-up on insider shares. The combination of these issues has pressured PSNL but it seems to have found support around the $10 area.
I expect that the stock will start to move as it announces some contracts for its NeXT product, but these are large deals with large companies and will take time to negotiate.
Analysts currently have price targets as follows: Morgan Stanley $28, Oppenheimer $29, Bank of America Merrill Lynch $22. So, there appears to be potential for a double or more if the company can nail down a few new customers.
I have a position and will look to add to it incrementally.
