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Leerink Upgrades Invitae to Outperform

NEW YORK (GenomeWeb) – Following Invitae's announcement earlier this week that its first quarter revenues rose sharply year over year, investment bank Leerink today upgraded shares of the company to an Outperform rating. 

Analyst Dan Leonard upgraded the San Francisco-based molecular diagnostics firm from a prior Market Perform rating but kept the price target on its shares at $20.

In a research note, Leonard said that Invitae, which reported its Q1 2015 revenues grew to $1.2 million from $118,000 in Q1 2014, has demonstrated continued commercial traction of its genetic testing business. He also said that Invitae remains on target with a planned expansion of its content. 

While new entrants into the genetic testing space, such as just-launched Color Genomics, is inevitable, "we think the genetic testing market is capable of supporting multiple players." He added that the market addressed by Invitae, hereditary syndromes, "could be massive. … One could envision large portions of the developed world's population as target customers."

Leonard also said because Invitae leverages existing and clinically proven biomarkers for its test, rather than developing products from the ground up with newly discovered biomarkers, Invitae stands a better chance of adoption by clinicians and payors. 

Lastly, he noted differentiating factors in Invitae's business model, including the company's plan to consolidate all existing gene tests into one product, which will lower the price for the product, "thus unlocking demand elasticity." 

In afternoon trading on the New York Stock Exchange Invitae's shares were up 13 percent at $14.02.