HTG Molecular Diagnostics Inc (HTGM) Wins Over a Price Target Lift; Here’s Why

Canaccord's Mark Massaro now bets on 50% in return potential for the healthcare player.


After HTG Molecular Diagnostics Inc (NASDAQ:HTGM) showcased an impressive 188% in rocket-fire revenue growth in 2017, trouncing expectations, one bull just got even more bullish on the medical research company.

Canaccord analyst Mark Massaro cheers that the company “delivers big” in its fourth quarter beat as it “fortifies [the] balance sheet,” leaving the HTGM team in a strong position to successfully execute.

In reaction, the analyst reiterates a Buy rating on HTGM while boosting the price target from $5 to $7, which implies a close to 50% upside from current levels. (To watch Massaro’s track record, click here)

For the fourth quarter, HTGM posted a mega 442% year-over-year rise in revenues, soaring up to $7.9 million. Keep in mind, this tops the company’s preannounced range that called for a 373% to 394% year-over-year surge to $6.9 to $7.2 million- which already would have taken the Street by storm. The company beat out Massaro’s forecast of $3.2 million by a long shot. HTG likewise dished out “surprisingly strong” record gross margins circling 83%, which pummeled the analyst’s projection of 55%. The company highlighted projects completed earlier than scheduled while pushing forth revenue into the fourth quarter. Meanwhile, the HTGM team anticipates operating expenses to increase sequentially in the first quarter on back of business investments to bolster more gains.

Additionally, Massaro deems the company’s 2018 outlook “solid,” noting that thanks to strides with Qiagen and various pharma partnerships, the company maintained its 2018 revenue guide of $20 to $25 million- denoting expectations for a 35% to 69% year-over-year jump in revenue.

“We think HTG could deliver above this range given the momentum of its business. As a reminder, we caution investors that the timing and amount of collaboration partner (as well as lab revenue) is lumpy,” notes the analyst, who all the same notes the company angles for over 30% in product (laboratory) revenue growth for the year. By Massaro’s estimation, this suggests product revenue for 2018 will range around $8 to $9 million plus and collaboration revenue will rocket 44% to 106% year-over-year up to $11.5 to $16.5 million.

Ultimately, “HTG delivered strong Q4 results that exceeded its pre-announcement, and fresh off a $40M+ secondary offering, looks well positioned to add resources to its business and execute against its growth initiatives. HTG reiterated its 2018 revenue outlook of $20-25M, and indicated that it’s in dialogue with pharma collaboration partners new to HTG, which could mark upside to our estimates upon completion of new deals. Net, net, we believe HTG offers a compelling platform well-positioned to enable pharma companies to develop novel therapies, and upon FDA clearance of its first panel (we expect by the end of Q4/18), transition to a clinical company,” Massaro concludes, bullish on this company’s healthcare opportunity ahead.

According to TipRanks, in addition to Massaro, another bull roars in favor of this healthcare stock: Ram Selvaraju of H.C. Wainwright has a Buy rating on HTGM with a $7 price target, marking 50% in return potential for the stock.