We View NSPH Shares As Undervalued At Current Levels, Says Roth Capital

In a research note released yesterday, Roth Capital analyst Chris Lewis reaffirmed a Buy rating on Nanosphere (NSPH) with a $3 price target ahead of the company’s second-quarter results, which will be reported after the close today.

Lewis wrote, “We expect a relatively inline 2Q. At this point, we look for management to reaffirm its 2014 system placement and revenue outlook, which we acknowledge will be somewhat dependent on the timing and magnitude of cash sale placements in 2H14”. The analyst continued, “We expect 2Q revenues of $3.7 million, slightly below the Street’s $3.9 million on an increase of 102% yoy and 14% sequentially, driven by an expected 38 Verigene system placements in 2Q14, up from 35 placements in the comparable quarter in the prior year and down from 48 placements in the prior quarter”.

Lewis added, “Based on peer comparables for high-growing molecular diagnostic companies and NSPH’s above-peer-average growth outlook, we view NSPH shares as undervalued at current levels. We do not believe NSPH’s stock pullback YTD is an accurate reflection of the company’s expanding menu and installed base, and improving underlying execution. With our expectation for revenue growth of 90% in 2014 and 85% in 2015, we believe the stock should be trading more inline with its high-growth diagnostic peer group at ~ 5x 2015 sales, which would imply a stock price in the $2.00-2.50 range”.

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Chris Lewis has a total average return of -6.5% and a 45% success rate. Lewis has a -25% average return when recommending NSPH, and is ranked #2990 out of 3205 analysts.

To read more rating news on NSPH click here.

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