Alliance Global Partners downgraded OpGen (NASDAQ:OPGN) to “neutral” and lowered its price target to 67 cents, citing the company’s cash needs. The stock closed at 61 cents on July 11.
“We view the company’s recent progress favorably as well as their portfolio of assets/products, but the apparent higher-than-anticipated burn rate and a recently commenced “at-the-market” (ATM) share sales facility suggest significant near-term equity issuance will occur,” writes analyst Ben Haynor.
In a preliminary announcement of second quarter results, OpGen, a molecular diagnostic company, exited the quarter with $16.6-million in cash, down from $30.7-million at the end of the first quarter.00
“Based on our expectation, OpGen will need to rely on their ATM for near-term funding,” Mr. Haynor said, adding that investors are likely to “remain on the sidelines if they believe the company will need to utilize their ATM aggressively.”
He said that if the company were to fully utilize the ATM at 60 cents, it would amount to about 17.8 million shares entering the market place, which “we think could put significant pressure on the stock.”