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Jefferies Resumes Coverage of Sequenom with Buy Rating

NEW YORK (GenomeWeb) – Investment bank Jefferies today resumed coverage of Sequenom with a Buy rating and a price target of $5.

In a research note, analyst Brandon Couillard noted Sequenom's deal with Quest Diagnostics to offer the MaterniT21 Plus non-invasive prenatal test, which he said "will significantly augment [Sequenom's] commercial reach in the Ob/Gyn channel, bolster its market share … and provides an avenue for it to potentially commercialize a solution for the low-risk market in the future." He also noted that the deal will put an end to Quest's agreement with Natera to offer that firm's Panorama NIPT.

Additionally, Couillard said that Sequenom has reimbursement agreements with three of the top five national payors to cover MaterniT21 Plus, expanding the number of covered lives to 140 million, up about 24 percent from the end of 2013. Medicaid fundamentals have also bottomed and more than 12 states are now actively paying for the test and cash collections are "up sharply" from the low levels that Sequenom saw in the second half of 2013, he added.

Lastly, Couillard said that the $31.8 million sale of Sequenom's bioscience business to Agena Bioscience will allow its management team to concentrate on delivering a profit and cash-flow inflection by the fourth quarter.

In morning trading on Thursday, shares of Sequenom were up 4 percent on the Nasdaq to $4.14.