One of last week's biggest winners was Organovo Holdings (NASDAQ:ONVO), climbing nearly 12% after Cantor Fitzgerald initiated coverage of the volatile bioprinting specialist with a bullish "buy" rating. The analyst is slapping a $5 price target on its shares.
That would have been an insulting goal and a bearish call when Organovo was trading in the double digits when it peaked in late 2013, but that was also a time when the market was excited about 3D printing stocks in general and Organovo's long-term potential in particular.
Organovo investors have certainly seen better days. The stock more than quadrupled in 2013, only to shed 35% of its value last year. Things have only gotten worse in 2015. The shares surrendered nearly half of their value before last week's bounce.
Organovo's aim is to design functional human tissues, and true to its name its ultimate goal is to use bioprinting technology to generate human organs. For now that's limited to proxies of human tissue that can be used to speed up medical testing for biotech upstarts working hard to gauge the safety of their potentially promising treatments.
The stock has taken a beating, even though Organovo did get its first product -- a 3D liver assay test that is able to discern between similar toxic and non-toxic backgrounds -- to market a few months ago. Organovo said last month that it still sees this exVive3D as a product with the potential to generate more than $100 million a year in revenue, but right now it's just starting to penetrate the toxicology market. The next big goal is to launch its 3D bioprinted kidney tissue next year.
Seeing this play out will take some time. Analysts see Organovo generating a mere $0.6 million in its fiscal year ending last month, and Wall Street pros are only holding out for $3.1 million in revenue later this year. Organovo's naturally posting hefty operating deficits at this stage of its disruption. It does have $50 million in cash on its clean balance sheet, but that's only going to be enough to see it through the next two years based on its projected annual burn rate of $25 million.
It's probably telling that Cantor Fitzgerald's valuation model is based on the discounted value of Organovo hitting its forecast for $0.81 a share on $288.3 million in revenue come fiscal 2021. Yes, 2021.
"This is a story that will take years -- not months -- to play out, but the obvious potential gains if Organovo becomes the first company to succeed commercially in bioprinting faux human tissue are substantial," I wrote last summer. "This is the kind of company that could be worth billions or nothing at all in a few years."
There still isn't a reason to think otherwise. This will be a feast or famine for investors along the way, and you can expect the volatility to continue as speculators hop on and off.
Rick Munarriz has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.