BioTuesdays: Feltl ups Cancer Genetics price target to $30.50 from $17.50
October 2, 2013 by Jennifer Poland · Leave a Comment
Feltl & Co. has raised its price target for “strong buy-rated” Cancer Genetics (NASDAQ:CGIX) to $30.50 from $17.55, which is based on a multiple of 3.5 times estimated enterprise value/sales for 2015. The stock closed at $19.60 on Tuesday.
A number of recent developments, including the company completing a secondary offering and expanding its relationship with an affiliate of Roche, “further validate CGI’s platform and go-to-market strategy,” writes analyst Ben Haynor.
In addition, Mr. Haynor figures the recent Foundation Medicine (NASDAQ:FMI) IPO, “sets a new benchmark for the valuation of molecular diagnostics firms.”
On the deal with Roche to bring Cancer Genetics’ ExpandDx community hospital program to Central America and the Caribbean, Mr. Haynor said that he has seen this type of relationship expansion before with other Roche collaborators and, and generally speaking, “it seems to us that once Roche begins the initial expansion of a relationship, it tends to grow much larger, so we would be unsurprised to see additional business from Roche in the future.”
On valuation, Mr. Haynor said that investors have shown a willingness to assign premium multiples to “as-a-service” recurring business models like the one employed by Cancer Genetics. ”However, given the fact that is early in the business’ development, we have chosen to take a conservative approach. Our valuation methodology leads us to a $30.50 price target (3.5x 2015 EV/sales) using a multiple inline with its publicly-traded comps as well as the low-end valuation of other molecular diagnostic firms at this point in their growth trajectory.”
Feltl who??? When you know mom and pop boiler room pumps and "upgrades" happening, you know the stock is overvalued.
Be careful, the IPO lockup period ends today so all the insiders and initial secondary share buyers will likely be selling from tomorrow. The stock is up 85% in less than week.