Analysts are weighing in on today’s biggest gainers and losers: HTG Molecular Diagnostics Inc (NASDAQ:HTGM) and Telefonaktiebolaget LM Ericsson (NASDAQ:ERIC). While one analyst considers HTGM as an acquisition candidate following yesterday’s agreement with Merck, the other remains sidelines on LM Ericsson following a disappointing earnings pre-announcement. Let’s take a closer look:
HTG Molecular Diagnostics Inc
HTG Molecular Diagnostics shares jumped over 60% today, after the company announced the signing of a broad companion diagnostics master agreement with Merck KGaA. This agreement centers on the development of proprietary diagnostics to accompany the future use of Merck KGaA’s selective and irreversible Bruton’s tyrosine kinase (Btk) inhibitor compound, M7583.
In the wake of the announcement of the Merck KGaA deal, H.C. Wainwright analyst Ram Selvaraju reiterated a Buy rating on shares of HTG Molecular Diagnostics, with a price target of $5, which represents a potential upside of 15% from where the stock is currently trading.
Selvaraju commneted, “From our perspective, this partnership provides HTG with the potential to brand its companion diagnostics efforts through a partnership with a well-known global pharmaceutical company on a potentially high-profile program, given the broad interest in Btk inhibitors shown in recent years.”
“We remind investors that other Btk inhibitor-focused companies, such as Pharmacyclics—acquired by AbbVie in March of last year for $21B—and Acerta—acquired by AstraZeneca for $4B in late 2015—have demonstrated the substantial value placed by the pharmaceutical industry on Btk-inhibiting strategies to treat hematological malignancies,” the analyst suggested.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Ram Selvaraju has a yearly average return of 2.3% and a 46% success rate. Selvaraju has a -9.2% average return when recommending HTGM, and is ranked #1059 out of 4183 analysts. As of this writing, the 3 analysts polled by TipRanks rate HTG Molecular Diagnostics stock a Buy. With a return potential of 11%, the stock’s consensus target price stands at $4.83.
Telefonaktiebolaget LM Ericsson
LM Ericsson shares tumbled nearly 19% to $5.65 after the Swedish telecoms company issued a negative pre-announcement. The company said its third-quarter earnings will be “significantly lower” than expected, citing a 19% sales decline in its core mobile-network equipment business to SEK23.3 billion.
In reaction, BMO Capital analyst Tim Long reiterated a Market Perform rating on shares of LM Ericsson, with a price target of $7.00, which implies an upside of 23% from current levels.
Long noted, “Although the company has in place a cost reduction program, we expect management will need to take on additional actions to scale down the business.”
“We note that Ericsson is predominantly exposed to wireless carriers, and is also undergoing a management transition. Therefore, we believe this miss does not necessarily mean that all companies with communications equipment exposure will miss the quarter, though some weakness is possible,” the analyst continued.
According to TipRanks.com, analyst Tim Long has a yearly average return of 7.1% and a 62% success rate. Long has a 4% average loss when recommending ERIC, and is ranked #493 out of 4183 analysts.
Out of the 15 analysts polled by TipRanks, 14 rate LM Ericsson stock a Hold, while 1 rates the stock a Sell. With a return potential of 38%, the stock’s consensus target price stands at $7.86.