Canaccord starts Exagen at buy; PT $25

Canaccord Genuity launched coverage of Exagen (NASDAQ:XGN) with a “buy” rating and $25 price target. The stock closed at $16.69 on April 14.

Analyst Max Masucci writes that Exagen provides a broad range of tests used to diagnose, prognose, and monitor autoimmune diseases, and other associated conditions, and faces limited competition.

Mr. Masucci said Exagen is trading at an approximate 62% discount to a peer group average forward-year enterprise value/sales multiple of 8.9 times. “We believe Exagen’s multiple understates the company’s growth profile; its repeat testing opportunity; and its leadership position in a $5-billion total addressable market in the U.S.”

Exagen’s longer-term reimbursement trends should be on the upswing in 2021, and the enhanced capabilities provided by its tests should spur the 5,000 U.S.-based rheumatologists to increase their willingness to pursue more aggressive testing strategies, he added.

Mr. Masucci said Exagen has six tests in its development pipeline, highlighted by a differential diagnostic test for fibromyalgia, which is the most common cause of chronic widespread musculoskeletal pain in the U.S.. and Exagen believes there could be more than 12 million undiagnosed patients in the U.S. alone.