NEW YORK (GenomeWeb News) – Investment bank Credit Suisse today upgraded shares of Sequenom to Neutral, noting the non-invasive prenatal fetal aneuploidy testing firm's announcement of its national contract with the Blue Cross Blue Shield Association last week.
Credit Suisse analyst Vamil Divan upgraded shares of the San Diego-based company's stock from Underperform and raised its target price to $4.50 from a previous target of $4.00.
The five-year contract with BCBS was announced by Sequenom concurrent with the release of its first-quarter earnings results, and in a research note, Divan said that he continues to expect pressure on reimbursement rates for new NIPTs as additional competitors enter the space, but that the BCBS deal "provides some clarity on this front."
He added that he expects Sequenom to sign additional national payor agreements throughout the year. The company has said that one of its goals for 2013 is to secure three national payors.
Divan also noted that while the company will likely continue losing market share to competitors, "enough of the high-risk market still needs to be penetrated to allow all of the players to show good volume growth."
Sequenom was the first to market with an NIPT when it launched its MaterniT21 Plus test in October 2011. Since then, other companies have entered the space, including Ariosa Diagnostics, Verinata Health, which is now owned by Illumina, and Natera.
Sequenom reiterated last week its expectations that it will run more than 150,000 MaterniT21 tests this year. Divan said he is modeling 175,000 test runs.
In afternoon trading, shares of Sequenom were up almost 6 percent on the Nasdaq at $4.27.