NEW YORK – Investment bank Craig-Hallum said Monday that it has initiated coverage of Personalis with a Buy rating on its stock and a price target of $8 per share.
Craig-Hallum analysts Bill Bonello and John Wilkin said in a note to investors that Personalis has built a "solid foundation for future growth," with multiple recent clinical data reports and partnerships across the diagnostics and pharmaceutical fields, including with Tempus, Merck, and Moderna.
Particularly with respect to its pharma partnerships, the analysts see "substantial opportunity" to drive revenue growth through the development and commercialization of personalized cell therapies and neoantigen therapies. The Fremont, California-based company has, for example, embedded its ImmunoID NeXT assay into Moderna's individualized neoantigen therapy (INT) workflow.
Although the Craig-Hallum analysts anticipate declining revenue from this partnership following completion of enrollment for a Phase III melanoma trial, they wrote that revenue gains could build significantly over the next two to three years as Moderna begins trials for other cancers. If Moderna's melanoma therapy is successful, Personalis' assay could become a meaningful source of ongoing revenue as it is commercialized by Moderna and Merck.
Other pharma partners, the analysts noted, are also beginning to use Personalis' NeXT Personal MRD test for clinical development in the minimal residual disease space.
"We anticipate that pharma adoption of this test could be both a meaningful source of revenue growth and an important endorsement for the test," they wrote.
Additionally, the analysts noted that Personalis is differentiating itself from competitors through a strategic focus on early-stage breast and lung cancers, as opposed to the more frequent target of colorectal cancer. Early-stage breast and lung cancers shed comparatively less DNA, which demands more sensitive assays to detect. Correspondingly, their markets are less penetrated, offering plenty of room for growth.
"We do see significant opportunity for multiple expansion as investors begin to realize that the company has a viable offering and powerful strategic collaborators to help drive growth," they wrote.
Additional potential growth catalysts for the company include growth in the MRD market, further publication of peer-reviewed studies, and possible Medicare reimbursement. The analysts anticipate Personalis to submit evidence to the US Centers for Medicare and Medicaid Services for breast cancer, lung cancer, and immuno-oncology, with potential Medicare coverage for at least two indications this year.
Craig-Hallum estimates $79.7 million in 2025 revenues for Personalis, slightly below the low end of the company's own guidance of between $80 million and $90 million and below Wall Street's consensus estimate of $82.9 million. Although Craig-Hallum would not typically recommend a stock when its estimates fall below consensus and guidance, the analysts wrote that they see Personalis as a "unique situation."
"In our estimation, value creation will be driven by success with MRD and potentially personalized neoantigen mRNA therapy," they wrote.
Personalis recently reported year-over-year revenue gains of 15 percent for 2024, driven largely by rising test sales.
In early morning trading on the Nasdaq, Personalis' stock was up roughly 3 percent at $3.75 per share.