BTIG upgraded NeoGenomics (NASDAQ:NEO) to “buy” from “neutral” with a price target of $11, saying that with a cleaner slate, it expects the shares to outperform. The stock closed at $8.49 on April 13.
Analyst Dr. Sean Lavin writes that when BTIG downgraded NeoGenomics last October, with the shares near $11, “our view was that the risk from heavy exposure to Texas/Florida and lingering Clarient issues would weigh significantly on the shares in the near term.”
These issues have largely dissipated, he said, adding that the biggest risk remains unexpected reimbursement changes.
“With 2018 Medicare pricing in place; known headwinds contemplated within guidance; and fewer questions around next generation sequencing post the final CMS rule, we feel there is sufficient cushion within guidance,” Dr. Lavin said.
Combined with solid volume trends, ongoing cost-cutting initiatives, and a growing BioPharma business, “we believe there is better potential for upside surprise over time,” he added. “At $8.50, we view the risk-reward as particularly compelling and recommend the shares.”
