NEW YORK – Investment banks Cowen and SVB Leerink said on Tuesday they have initiated coverage of miniature mass spectrometry firm 908 Devices, both with an Outperform rating, and SVB Leerink with a price target of $70 per share.
Boston, Massachusetts-based 908 Devices features among its core technologies microfluidic capillary-electrophoresis systems for upfront separation of samples and high-pressure mass spec analyzers that are able to operate without the vacuum conditions used in conventional systems, allowing for much smaller and cheaper instruments that it sells for applications including military and hazmat use as well as bioprocessing.
In a note to investors, Cowen analyst Doug Schenkel said that the company "is well positioned to deliver strong revenue CAGR" with its current product portfolio, which includes a handheld mass spec, the MX908, a benchtop device for bioprocessing, the Rebel, and its ZipChip sample separation platform.
He added that while the "valuation is robust" given that the company's shares have more than doubled since its December IPO at $20 per share, "we believe the longer-term risk/reward is attractive given the revenue growth outlook and the large untapped market opportunity."
SVB Leerink analyst Puneet Souda wrote in an investor note that he viewed the company's long-term performance as strongly tied to the Rebel device, noting that it has the potential to become the first "at-line/on-line bioprocessing mass spec" that becomes integrated into areas like antibody drug development and cellular therapies. He added that the consumables revenue stream for the device could "realistically reach $250,000 over the next several years," up from $40,000 currently.
"Much like how the desktop PCs of 1970s made computing accessible to a much broader market vs mainframe computers, we see 908 Devices' products being used by everyday users from police officers and battlefield soldiers detecting drugs and toxic materials, to manufacturing testing chemical products, and with average lab personnel (non-mass spec) using it for development and production of biomolecular drugs," Souda wrote.
In Tuesday morning trade on the Nasdaq, shares of 908 Devices were up less than 1 percent to $57.05.