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Leerink Swann Upgrades Fluidigm to Outperform

NEW YORK (GenomeWeb News) – Leerink Swann today upgraded shares of Fluidigm, noting a potentially multi-billion market opportunity for single-cell gene expression tools and the recent acquisition of DVS Sciences as drivers.

In a research note, Dan Leonard raised the rating on Fluidigm to Outperform from Market Perform, and maintained a $52 price target on the South San Francisco, Calif.-based firm's stock.

According to Fluidigm, the immediate market opportunity for single-cell genomics and proteomics analysis tools could reach $900 million by 2017, but, Leonard said, the "ultimate opportunity … could be much larger." Using the installed base of flow cytometers as a proxy for single-cell prep and analysis tools, he estimated Fluidigm's market opportunity could be in the multi-billions of dollars for cumulative instrument placements.

He added that "every survey we've ever run on single-cell analysis" suggests that interest in the research method runs high, with about 70 percent of respondents to Leerink Swann's surveys conducted since late 2012 saying they plan to conduct single-cell gene expression analysis within two years.

Also, funding for such research remains robust, Leonard said, noting priority given to single-cell gene expression research by the UK Medical Research Council as part of a recent £140 million ($234 million) capital allocation.

"Also, we believe [Fluidigm's] C1 single-cell prep instrument recent price increase (to $175,000 from $150,000) is a bullish indication for strong demand," he added.

Fluidigm started 2014 by acquiring mass cytometry firm DVS Sciences for about $207.5 million, providing the firm with a foothold in the high-end flow cytometry and single-cell proteomics markets. DVS' technology "doesn't directly integrate" with Fluidigm's, Leonard said, but "we think there is lots of white space where [Fluidigm's] microfluidic methods, combined with DVS' labeling and detection might offer solutions."

Lastly, Leonard said that Fluidigm is in the midst of efforts to increase its consumables pull-through. The company's average annual consumables pull-through per instrument is about 15 percent to 25 percent of the instrument's list price. The company will need to increase that figure "ultimately to drive leverage in its business model," Leonard said.

In Monday afternoon trading on the Nasdaq, shares of Fluidigm were about about 7 percent at $35.83.