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Leerink Swann Downgrades Fluidigm, Noting Company's Shares May Take 'A Breather'

NEW YORK (GenomeWeb News) – Leerink Swann today downgraded Fluidigm to Market Perform, saying the company "could take a breather in the near term" after a 30 percent spike in its stock since the start of the year.

In lowering Fluidigm from a previous Outperform rating, analyst Dan Leonard added that he sees "better risk/reward" in Genomic Health and Luminex.

In a research note, he said the South San Francisco, Calif.-based firm's stock has steadily climbed in 2013 despite "a backdrop of mixed datapoints." Leonard pointed to a Leerink Swann survey from this month that indicated sustained interest in single cell analysis. While only 18 percent of respondents currently do single cell gene expression analysis in their labs, nearly 69 percent anticipate doing so in the next two years, according to the survey.

However, of the 33 respondents who said they believe they will perform single cell analysis in the next two years and who didn't have a Fluidigm C1 instrument, just one researcher indicated plans to purchase one in 2013, Leonard said.

"Twelve thought they would maybe purchase a C1, with the average respondent defining 'maybe' as 50/50 odds," he said.

The survey results are generally positive for Fluidigm, and the continued interest in single cell applications "validates [Fluidigm's] opportunity and minimal incremental C1 purchase plans from a survey sample likely weighted toward non-Fluidigm users is not all that surprising," Leonard said, adding that core labs, which made up more than half of the survey's sample set, may be a lagging indicator for the C1 instrument.

"That said, we'd feel more comfortable if the C1 wasn't so important to our 2013 forecast," he said. "Not only does it comprise [more than] 15 percent of our 2013 product revenue forecast by itself, but we're also assuming that it motivates additional BioMark purchases."

Leonard also noted "choppy" first-quarter results from Fluidigm's peers, which could suggest similar results for the company, and a weakening Japanese yen which could trim 1 percent from the company's top line growth for full-year 2013.

Fluidigm is scheduled to report its first-quarter earnings results on Wednesday.

Leonard reduced first-quarter revenue estimates to $13.6 million from an earlier estimate of $14.0 million, and lowered full-year 2013 revenue estimates to $64.4 million from $65.9 million. He kept his net loss per share estimate for the first quarter at $.23 but increased his estimate for full-year 2013 to a loss of $.79 per share from an earlier estimate of a net loss of $.75 per share.

In afternoon trading on the Nasdaq, shares of Fluidigm were down more than 5 percent to $17.60

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