NeoGenomics: The Current Risk/Reward Profile Is Attractive, Says William Blair
In reaction to NeoGenomics (NEO) second-quarter earnings release, William Blair analyst Amanda Murphy maintained an Outperform rating, following 2Q14 report. No price target was assigned.
Murphy noted, “NeoGenomics reported second-quarter results that were in line with preannounced guidance, although underlying fundamentals were better than expected. The company also increased guidance for the year and provided preliminary guidance for the third quarter that was above Street consensus estimates. We are encouraged by the underlying volume growth of 40% and the company’s ability to expand gross margin (lowered COGS 12%), despite facing meaningful reimbursement changes related to FISH”.
The analyst added, “NeoGenomics continues to win new business (one-third of growth came from new clients) and expand its test menu (recent NeoTYPE cancer profiles launch). The company’s future growth prospects look bright with a ramping-up clinical trials business, synergistic revenue from Path Logic clients, and launch of NEOLAB Prostate, NGS molecular tests, as well as the development of digital pathology products. Thus, with NCCI fish edits already baked into consensus, we believe the risk/reward profile is attractive and thus maintain our Outperform rating.
According to TipRanks.com, which measures analysts and bloggers success rate based on how their calls perform, analyst Amanda Murphy has a 2.1% average return and a 67% success rate. Murphy is ranked #2347 out of 3195 analysts.