Oxford Nanopore Technologies (LSE:ONT) is an exciting FTSE 250 stock and is massively undervalued according to analysts. However, despite its groundbreaking technology and recent collaborations, the stock has slumped. Unlike many of its peers, the slump actually has very little to do with Donald Trump’s tariffs.
A DNA pioneer
For those unfamiliar, Oxford Nanopore is a pioneer in third-generation DNA sequencing technology. The company’s devices use nanopores — these are tiny protein-based structures — to sequence DNA or RNA in real time by detecting electrical changes as molecules pass through these pores. This technology is all available on handheld devices.
Its technology is used across multiple fields, ranging from infectious disease analysis to genomic surveillance in remote locations. For instance, its devices were used during the Ebola outbreak in 2015 to sequence viral genomes rapidly.
However, things haven’t gone to plan since listing in late 2021. Oxford Nanopore’s share price has plummeted by over 80%, reducing its market capitalisation to over £1bn. This dramatic decline stems from a combination of factors, including persistent losses, heightened competition, and macroeconomic challenges such as rising interest rates. Analysts have also flagged concerns about slower-than-expected growth and a worsening funding environment.
Analysts call this a ‘Strong Buy’
Despite the collapsing share price, analysts seem remarkably bullish. Of the 10 analysts covering the stock, four have Buy ratings and four have Outperform ratings. What’s more, the average share price target is now 69% higher than the current share price. This is typically a good sign. Incidentally, the highest share price target is 138% above where we are today.
However, shrewd investors will need to question this call. The company’s operating loss has nearly doubled to £152m since 2019, and the forecast suggests it won’t reach adjusted EBITDA breakeven until 2027. For 2025, analysts expected negative earnings per share (EPS) of 15.9p. That’s not insignificant for stock valued at 114p per share.
The saving grace is the net cash position which currently stands at £292m and is set to fall to £158m by the end of 2026 based on the forecast. That means it does have some runway until its long-awaited profitability.
Of course, it may not reach profitability in its current state. Ongoing losses and a falling share price have made the stock vulnerable, with some suggesting it could become a takeover target for larger players like Thermo Fisher Scientific or Danaher.
The bottom line
On 9 April 2025, Oxford Nanopore announced a strategic collaboration with Cepheid to develop automated sequencing solutions for infectious diseases. The could expand into other areas like cancer diagnostics and human genetics, potentially opening new revenue streams.
However, investors should be wary that Oxford Nanopore is a classic high-risk, high-reward investment. Its innovative technology and strategic collaborations position it well for future growth, but I’m reluctant to throw my own money behind it. Nonetheless, I’ll continue to keep a close eye on developments.
