NEW YORK – Stocks of molecular diagnostics and omics companies were up in March, tracking with a rise in the broader market.
Overall, the GenomeWeb Top 40 was up 3 percent. By comparison, the Dow Jones Industrial Average was up 2 percent, while the Nasdaq was up 7 percent, and the Nasdaq Biotech Index was up 1 percent. Of the 40 firms tracked by GenomeWeb, half saw their stock prices rise month over month, while the other half had their share price decline.
Pacific Biosciences led the winners, as its stock was up 28 percent month over month. A recent survey by investment bank TD Cowen indicated solid demand for the company's Revio sequencing system and growing interest in long-read sequencing tools more generally. In a note to investors, TD Cowen analyst Dan Brennan said survey respondents "expect to buy almost three Revios per lab on average through to 2024." The bank upgraded PacBio to an Outperform rating with a price target of $15.
Myriad Genetics posted the second-largest gain during the month, with its stock up 23 percent from February. At the beginning of March, Myriad reported that its Q4 revenues were up 11 percent year over year, driven by an increase in testing volumes. It posted $177.8 million in revenues in Q4, beating the consensus Wall Street estimate of $169.5 million. The company also said it anticipates full-year 2023 revenues in the range of $720 million to $750 million and an adjusted loss per share of $.20 to $.40, in line with analysts' consensus estimate of full-year revenues of $725.0 million and adjusted LPS of $.30.
In a note to investors, JP Morgan analyst Julia Qin called the Q4 volume uptick encouraging but said the company would need "continued strong execution" to hit its guidance.
Also in March, Myriad and Illumina announced that Myriad would begin offering Illumina's TruSight Oncology 500 HRD research-use-only assay in the US and that the two firms had formed a companion diagnostic alliance to pursue regulatory approvals for the MyChoice HRD assay companion diagnostic and a future clinical in vitro diagnostic test based on the TSO 500 HRD assay.
10x Genomics posted the third-largest rise in stock price during March, with shares up 17 percent month over month. The company did not report any news that appeared to drive that rise.
CareDx saw the biggest decline in March as its stock fell 46 percent month over month. The drop was driven largely by changes Palmetto MolDx made to its reimbursement guidance for molecular tests assessing rejection risk in solid organs. These make its policy more restrictive in ways that could substantially impact CareDx's business.
In a note to investors, Craig-Hallum analyst Alexander Nowak wrote that MolDx's change may wipe out $15 million of revenue coming from the company's HeartCare product and up to $50 million of its $191 million kidney testing business. Nowak downgraded CareDx shares to a Hold with a $9 price target, though investment banks Jefferies and BTIG maintained their Buy positions.
On a more positive note, March also saw the American Society of Transplant Surgeons (ASTS) endorse the use of donor-derived, cell-free DNA (dd-cfDNA) as well as peripheral blood gene expression profiling in organ transplant care, which are strategies CareDx uses in its products.
Invitae saw the second-largest decline in March, with its stock down 37 percent compared to February. At the beginning of March, the company announced Q4 revenues of $122.5 million, down roughly 3 percent from $126.1 million the year before and slightly above the Wall Street consensus of $121.3 million. The firm also announced a convertible notes debt refinancing and a $30 million new capital raise. It said it expects full-year revenue in 2023 to exceed $500 million, representing low double-digit year-over-year growth compared to 2022.
In an investor note, JP Morgan's Qin called the company's guidance "underwhelming" and said it raised concerns about its ability to hit its growth targets.
Invitae also received coverage from Blue Shield of California for its Personalized Cancer Monitoring assay in March and inked a deal with electronic health record firm Epic Systems to provide access to its genetic test results directly through Epic's Aura specialty diagnostics suite.
Akoya Biosciences had the third-largest decline in stock price during March, with shares down 29 percent month over month. The drop came despite strong Q4 results, with the company posting revenues of $21.2 million, up 36 percent from $16.2 million in Q4 2021 and beating analysts' average estimate of $20.6 million.
In a note to investors, Kyle Mikson, an analyst at Canaccord Genuity, suggested that Akoya's stock had been hurt by the company's modest consumables pull through and investors' expectation that it had plans to raise new financing in the near term. He added that he believed these concerns are "overblown" and maintained the bank's Buy rating and $25 price target.
|GenomeWeb Top 40|
|Burning Rock Biotech||BNR||2.81||3.26||-13.80|
|Thermo Fisher Scientific***||TMO||576.37||541.76||6.39|
|GenomeWeb Top 40 Average||79.38||76.85||3.29|
|*Becton Dickinson paid a dividend of $.91 on March 9.|
|**Danaher paid a dividend of $.27 on March 30.|
|***Thermo Fisher Scientific paid a dividend of $.35 on March 14.|