William Blair Upgrades Foundation Medicine Shares To Outperform


In a research report issued today, William Blair analyst Amanda Murphy upgraded shares of Foundation Medicine (NASDAQ:FMI) to Outperform rating. No price target was provided.

Murphy noted, “We are upgrading the shares to Outperform from Market Perform given our view that despite continued competitive noise, with its first-mover advantage, building scale, and investments in workflow, Foundation Medicine has the potential to be a key player in complex, next-generation sequencing diagnostic services in cancer. Moreover, while Priority Health is a small payer, we believe this could catalyze additional positive payer discussions, and we were positively surprised by the breadth of Priority’s coverage. Pricing seems to have come reasonably in line with historical management commentary around ASPs ($3,600); we believe current investor expectations are for about $3,000. Finally, valuation has become much more compelling; the stock is trading at an enterprise value of 4.5 times projected 2015 sales, half of peak valuation at 10.0 times. Assuming the stock holds its multiple, based on our projected 2016 revenue, suggests an enterprise value of $862 million (67% upside from market close).”

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Amanda Murphy has a total average return of 1.6% and a 57.1% success rate. Murphy is ranked #1907 out of 3336 analysts.

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