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Cowen, JP Morgan, Evercore ISI, Bank of America Initiate Coverage of 10x Genomics

NEW YORK – Cowen, JP Morgan, and Bank of America today initiated coverage of 10x Genomics, following Evercore ISI, which had initiated coverage last month.

Cowen and Evercore ISI gave shares of the single-cell sequencing firm an Outperform rating, while JP Morgan rated shares as Overweight and Bank of America as Buy. Both Cowen and JP Morgan set a price target of $55, Evercore ISI set a price target of $70, and Bank of America's price target is $62.

Cowen's rating was due to " the company's early success, tremendous promise, favorable business model, and competitive positioning," analyst Doug Schenkel wrote in a note.

"10x Genomics has become the leader in the large, rapidly growing single-cell space. We believe 10x's resolution and scale clearly outpace other approaches and are highly valued by customers, as evidenced by the rapid adoption of 10x instruments."

"As it has a more attractive top-line growth profile relative to peers, we believe a valuation premium is justified and continue to see room for upside vs. current levels," JP Morgan analyst Tycho Peterson wrote.

Pleasanton, California-based 10x closed its initial public offering last month, with aggregate gross proceeds of $448.5 million before discounts commissions and expenses. JP Morgan, Goldman Sachs, and Bank of America Merrill Lynch acted as lead joint book-running managers and Cowen acted as lead manager. The underwriters fully exercised their option to purchase 1.5 million shares.

The firm's estimate for its total addressable market is approximately $13 billion, and the analysts wrote that the market would allow the firm to continue to grow. The firm "is addressing a large, high-growth market that is minimally penetrated today," Schenkel wrote, adding that the firm has "already demonstrated robust growth in its installed base," placing half of its more than 1,200 Chromium instruments in the last year.

"Rarely within Life Sciences does a new technology with this firepower stay limited to the few applications with which it was introduced to the market," Evercore ISI analyst Luke Sergott wrote. "10x's technology has next-generation sequencing-style potential and we see a feasible estimate that the technology could penetrate [about] 20 percent of the qPCR market, which has [about] 50k instruments globally."

"Strong customer traction and an exciting pipeline reinforce our confidence in [10x's] ability to penetrate its total addressable market," Peterson wrote.

Both JP Morgan and Cowen noted that the firm's intellectual property fight with Bio-Rad Laboratories posed risks, but that it had taken steps to address the commercial and financial impact.

In morning trading on the Nasdaq, shares of 10x were up less than 1 percent at $51.71.

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