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William Blair Upgrades Meridian Bioscience to Outperform

NEW YORK – Investment bank William Blair on Monday upgraded Meridian Bioscience's shares to Outperform from a prior Market Perform rating.

In an analyst note, Brian Weinstein called Meridian an "overlooked beneficiary" from the SARS-CoV-2 pandemic, noting in particular that the Cincinnati-based firm is providing essential components for many molecular and serology tests. This the first time William Blair has upgraded Meridian's shares to Outperform in more than 10 years, Weinstein added.

The pandemic provided an opportunity to increase both revenue and exposure of Meridian's life science segment, as the company noted on its fiscal second quarter earnings call last week. Weinstein said he expected the increased exposure to be a "multiyear benefit to cash flow and profitability."

"We recognize the increase in demand for COVID-19 testing may be considered one time, but the fact of the matter is we strongly believe we will be testing for this virus for many years in some form," Weinstein wrote. "And because Meridian’s life science segment is working with over 35 molecular players and some of the biggest companies in serology, we think the story is now about this as opposed to clinical diagnostics."

Potential risks for the company Weinstein noted include competitive pressures in the molecular diagnostics industry and the timing of regulatory approval for future products, which could potentially be pushed back due to the COVID-19 pandemic.