HTG Molecular Diagnostics Inc (NASDAQ:HTGM) Rockets On Revaluation

Back at the beginning of March, we took a look at HTG Molecular Diagnostics Inc (NASDAQ:HTGM) as part of this piece. The point of the coverage was pretty simple – that the company was missing out on upside momentum, despite materially advancing its operations, because of the seeming complexity of what it's selling, and to who.We noted that the longer this went on, the larger the disparity between price and potential would become, and in turn, the larger the revaluation would be when markets finally caught up with the fundamentals.At the end of last week, we got the revaluation.HTG went from trading for around $2.1 a share mid week to closing out on Friday for $9.65 – a more than 145% run. Premarket this week, the company is up another 14%, and will open on Monday for $11 a share. All told, that's a 423% gain in a little under three days.The question now becomes, what's next?Many are looking for the specific catalyst that caused this recent run, as it's not immediately clear. HTG announced that it has obtained CE marking in the European Union for its HTG EdgeSeq ALKPlus Assay EU last week, and this is no doubt playing into the move. Management also held a conference call to discuss operations and fourth quarter 2016 numbers on Friday, which we sat in on, and there's plenty in that call to be optimistic about outside of the CE mark announcement.As we've said already, though, the run is more of a longer term (overdue) revaluation than it is a purely catalyst driven gain. Sure, the call and the CE marking have served as catalysts to get things moving, but it's very much a straw that broke the camel's back situation in that it's been a long time coming, and that last week's developments were the spark that initiated the change.This, then, helps us to predict what's next. If HTG ran up more than 400% on the announcing of the CE mark alone, and we believed that it was this development that accounted for the majority portion of the added value, then we'd be a lot more cynical about the company's ability to support its current capitalization. In other words, we'd be looking for a near term (and likely severe) correction, not just driven by shorter term operators taking profits off the table, but by markets cooling off on a seeming overreaction.That's not the case, however. This revaluation has been building up over time, and especially as reinforced by some of management's comments on the recent call, we think HTG can support its current price pretty easily. Further, that now markets are looking at the stock, and it's no longer an under the radar play, that there are some 2017 catalysts that could serve to initiate further upside revaluation as and when they play out.There's a Merck & Co., Inc. (NYSE:MRK) collaboration that has already provided proof of concept, and management let us know Friday that it expects to see added programs with Merck over time. There's the ongoing QIAGEN partnership that's bringing in fresh contracts all the time, and that should expand exponentially throughout 2018. Third quarter should see the submission of a module in the ALK plus program to the FDA. From a numbers perspective, management stated that the company saw considerable growth during 2016 (total revenue came in at $1.59 million for the fourth quarter of 2016, compared to the $1.2 million recorded for the same period in 2015) and that it expects to double that growth throughout 2017.Quarterly cash burn sits at around $1.6 million right now, and HTG expects that to remain consistent going forward (excluding the potential for the resuming of its halted JANUS program, but we don't see that happening near term). With a cash balance of $11.8 million, there shouldn’t be any need to dilute until at least mid to late 2018 (and that's conservative).Bottom line here is that this isn’t just a catalyst spike. It's a long time coming revaluation, and that suggests support, and revaluation from this point in line with growth going forward.That said, chances are we'll see a very near term correction as profits are taken off the table, but it shouldn’t last.We will be updating our subscribers as soon as we know more. For the latest updates on HTGM, sign up below!Disclosure: We have no position in any of the securities mentioned and have not been compensated for this article.