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First Analysis Initiates Coverage of NeoGenomics at Overweight

NEW YORK (GenomeWeb) – Investment bank First Analysis has initiated coverage of NeoGenomics with an Overweight rating and a price target of $11, citing in part the company's more robust scale and product portfolio after its acquisition of Clarient.

With the integration of Clarient "well underway, NeoGenomics is positioned to take cancer diagnostics market share as a result of its increased scale and now broader and more comprehensive suite of offerings," First Analysis analyst Joseph Munda wrote in a research note Monday.

In July, Douglas VanOort, NeoGenomics' chairman and CEO, noted then that the company had a greater level of confidence around its integration of Clarient -- a business it acquired in 2015 from GE Healthcare's Life Sciences business.

"With greater visibility about the integration and the reimbursement environment for 2017, we're excited about our prospects as we look ahead to the future," he said in a conference call at that time.

These attributes are appealing to a base of clients that include hospitals, physicians, and pharmaceutical industry companies that are becoming more interested in streamlining activities with vendors, according to First Analysis. Having to send specimens to fewer labs that each have more comprehensive levels of service can save pathology groups and hospitals money and time dealing with administrative issues, the investment bank said.

NeoGenomics is also part of a fast growing portion of the cancer diagnostics lab market, which is worth an estimated $5 billion, and is growing at 10 percent per year, First Analysis added.        

The firm's shares were up nearly 6 percent at $8.52 in morning trading on the Nasdaq.