AGP cuts T2 Biosystems to neutral; PT 40 cents

Alliance Global Partners downgraded T2 Biosystems (NASDAQ:TTOO) to “neutral” from “buy” with a price target of 40 cents after the company reported second quarter results. The stock closed at 59 cents on Aug. 1.

The company reported $1.8-million in total revenue, including $1.3-million of product revenue, compared with AGP estimates of $1.9-million and $1.6-million, respectively, writes analyst Ben Haynor.

The company had previously guided to 100%-plus growth in 2019 product revenue, but it has now reduced the guidance range to $5.7-million to $6.1-million, or 23% growth at the midpoint, he added.

T2’s system install base increased 53% last year. The company now expects 43-to-53 systems to be installed this year, down from 70-to-80 systems mentioned on the first quarter call.

“We believe in T2’s technology and long-term opportunity, but we find it hard to get excited about near-term share performance with an at-the-market [ATM equity offering] in place, knowing the company needs an additional $40-million to reach breakeven,” Mr. Haynor said.

“Our updated model expects the company to utilize the entire $30-million ATM and sell the 8.9 million shares available under the Lincoln Park Capital agreement,” he added.