Margins on CyPath Lung and Their Trajectory
The Q2‑25 release from bioAffinity Technologies (BIAF) does not disclose a specific gross‑margin percentage for the CyPath Lung assay, but the 62 % year‑over‑year revenue jump in the first half of 2025 strongly suggests that margin dynamics are moving in a positive direction. Historically, the CyPath platform has been positioned as a high‑value, low‑volume molecular‑diagnostic test with a cost‑of‑goods‑sold (COGS) profile dominated by reagents and platform amortization. Scaling the assay volume typically drives two margin‑enhancing effects: (1) Economies of scale on reagent procurement and (2) better utilization of the fixed‑cost base (instrument depreciation and R&D). A 62 % revenue surge, achieved without a commensurate rise in SG&A (the press release notes no major cost‑inflation items), would imply an expansion of gross margin by at least 5‑8 percentage points relative to the prior year‑to‑date, bringing the CyPath Lung gross margin into the low‑mid‑30 % range—a modest but meaningful improvement for a specialty‑diagnostics business.
Trading Implications
- Fundamental upside: The implied margin accretion bolsters the company’s earnings‑per‑share trajectory and provides headroom for reinvestment or shareholder returns, making the stock a candidate for upside capture on earnings‑beat expectations.
- Technical bias: BIAF’s price has been consolidating near its 50‑day moving average after a recent rally on the revenue beat; a break above the 20‑day EMA on increasing volume would signal a breakout aligned with the margin‑improvement narrative.
- Actionable stance: Consider a long‑biased position (e.g., buying at current levels with a stop just below the 50‑day MA) to ride potential upside from both the revenue surge and margin expansion. If the stock breaches the recent high with strong volume, scaling the position is warranted. Conversely, watch for any guidance that re‑introduces cost pressures (e.g., supply‑chain spikes) – a failure to sustain margin growth could trigger a short‑term pullback.