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Raymond James Upgrades Genomic Health to Market Perform

NEW YORK (GenomeWeb) – Investment bank Raymond James today upgraded shares of Genomic Health, citing an expected return to growth in the fourth quarter of Fiscal Year 2015.

Analyst Nicholas Jansen upgraded the firm's shares to market perform from underperform. In a research note, he said that he believed the second quarter represented the trough of the stock's recent slide and expected the firm to return to double-digit growth in the fourth quarter and into the Fiscal Year 2016, based on expected reimbursement for its Oncotype DX prostate cancer test, UK National Health Service contracts, and growing awareness of use of the test for ductal carcinoma in situ.

"We had been negative on the stock for about two years on the prospects of decelerating growth during the transition from a US breast cancer franchise to a more diversified company with multiple drivers," he said. "This thesis played out." Shares of Genomic Health have dropped 16 percent in the year to date, he noted.

Jansen said the upgrade was "not necessarily a call to 'buy' the stock," as he expected Genomic Health to miss third quarter revenue projections, and success in the fourth quarter and beyond is not guaranteed.

However, he added, "We see a more balanced risk/reward … the pipeline has some interesting assets (liquid biopsy), and strategic M&A could be in the cards with a strong balance sheet."

Shares of Genomic Health were up just over 1 percent in afternoon trading on the Nasdaq.