HTG Molecular Diagnostics Inc (NASDAQ:HTGM) Should Have Found Support Post-Correction

In our late March coverage of HTG Molecular Diagnostics Inc (NASDAQ:HTGM), we argued that run we'd seen to that date was representative of a longer term (and long time coming) revaluation in a stock that had been overlooked (and in turn, underpriced) by wider markets.The revaluation ended up carrying the stock to highs of around $12.5 and then settled in and around the $10-mark post run. Since then, the company has given back some of the gains to the market. As we noted last time, this correction is likely more representative of the shorter term operators pulling profits off the table than it is of anything else.Earlier this week, the correction had brought HTG to trade in and around the $6 range. Over the last twenty-four hours, however, the company has reversed again, and closed out the session on Thursday for $7.24 a pop. We think that this signals the end of the corrective move, and that current price offers a support floor from which HTG can stage a return to the upside momentum.For those new to the company, it's a biotechnology stock with a molecular diagnostics focus. We first brought HTG to our readers' attention back at the beginning of March, when it was trading in and around $2.5, hypothesizing that it was undervalued at that price because people didn’t really understand what it does. This lack of understanding translated to an underestimation of what impact the company could have on the biotech space as a whole, and this underestimation – in turn – resulted in mispricing. Due to its complexity, we're not going to go into a whole lot of detail here describing what the company does. For those looking for the detail, however, we strongly recommend checking out our initial (and follow up) coverage, here (and here).For those that don't want to click away, the company has basically developed a diagnostics technology that fills a gap in the space – a gap that has been widening over the past twenty years or so, and that really needed addressing. Tissue samples (say those from a cancerous tumor) that physicians use to diagnose disease type and severity are getting smaller and smaller due to less invasive procedures and more accurate extraction tech. The machines that test them, however, still need large samples (or a portion of a large sample, at least). HTGM's tech is able to run multiple tests on a small sample. In other words, it can do the work of a number of different testing machines on a sample that would previously have only been large enough for one machine to test.So where are we looking for future catalysts?We're keeping an eye on two partnerships as value drivers throughout the next couple of quarters. One is with Merck & Co., Inc.(NYSE:MRK) and the other is with a German company called Qiagen. The latter is probably able to spawn more frequent updates, especially near term, but don't underestimate the importance of the Merck partnership from a long term value creation perspective. It's already borne proof of concept, and management has expressly stated expectations of a number of programs being announced based on this proof of concept achievement.We're also looking at the quantitative side of things as having the potential to draw speculative capital out of the woodwork. This is no longer an under the radar play, and with revenues expected to double between 2016 and 2017, there's plenty of potential for some eye catching headlines as and when earnings hit press.We've seen a bit of insider buying over the last month or so, so there's obviously some degree of confidence behind the curtain in HTG's ability to revalue from its current position.It's not a risk free allocation, of course. Primary among the risks is the standard dilution risk, although as we've noted, there's probably enough cash on hand to last through mid to late 2018.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 HTGM and have not been compensated for this article.