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Raymond James Downgrades Meridian Bio to Underperform

NEW YORK (GenomeWeb) – Raymond James Equity on Friday downgraded shares of Meridian Bioscience to Underperform, noting challenges to the company's molecular diagnostics business.

Analyst Nicholas Jansen downgraded Meridian Bio from a previous Market Perform rating and pointed out that the firm's molecular diagnostic illumigene C. difficile franchise will remain under pressure, potentially offsetting "any positive traction seen in new menu expansion areas such as pertussis."

Jansen estimated Meridian Bio's C. difficile franchise at $35 million, but said that it faces competition from about a dozen other firms in the space already. As the company looks to other disease areas, they will address smaller markets than C. difficile, and "considering Meridian's modest menu expansion plans for illumigene vs. peers, we see less reason for illumigene adoption going forward amidst new competitive instrument releases. We also believe the lack of a complete sample-to-answer platform will constrain" the company's total addressable market, he added.

In November, Meridian Bio reported a 5 percent decline in its total revenues for its fiscal fourth quarter, due in large part to flattening sales of its illumigene products.

Jansen also noted that historical growth drivers for Meridian Bio, such as foodborne pathogen testing and H. pylori are declining and said that the firm may need to look to mergers and acquisitions to stimulate growth, though that could dilute its margin profile.

In morning trading on Monday, shares of Meridian Bio were up a fraction of 1 percent at $16.49 on the Nasdaq. 

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