UPDATE: Morgan Stanley Downgrades NanoString Tech to EW from OW, Changing PT from $14.00 to NA

In a report published Monday, Morgan Stanley analyst Daniel Brennan downgraded NanoString Technologies, Inc. NSTG, changing its price target from $14.00 to NA. According to the report, since IPO, NSTG's stock is up ~70% vs the S&P 500 +16%. While the analysts raise their base case to $18.00, a more balanced risk-reward is seen at current levels. “NSTG's Prosigna diagnostic breast cancer assay is differentiated from market leader GHDX's Oncotype DX, and post the recent FDA approval and lab distribution announcements (most notably DGX & LH), we expect a significant ramp penetrating the ~$1Bn global TAM,” the report said. “The company's nCounter instrument also has many attractive features, which support continued strong growth in academic and research markets, along with an exciting new clinical lab developed test opportunity.” Some highlights from the report included: -”NSTG rose ~70% since its June 25 IPO, and more than doubled from its lows, driven by FDA approval, lab announcements & quarterly results.” -”We forecast rapid Prosigna penetration (~9% of the US market by Q4 '14 and ~14% by Q4 15), supporting attractive +57% and +41% YY revenue growth rates in ‘14 & ‘15; however, our forecasts are (7%) and (11%) below consensus, which we feel over-estimate the Prosigna ramp.” Some concerns to NSTG includes rev growth exceeding forecasts, driven by greater diagnostic uptake or faster tools growth; valuation expands based upon strong execution and better than expected Prosigna uptake. NSTG closed Friday at $16.70 with shares trading down at 2.22 percent.
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Posted In: Analyst ColorDowngradesAnalyst RatingsDaniel BrennanMorgan Stanley
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