Rosetta Genomics Shares Upgraded To Buy At Cantor

In a report published Friday, analyst Sung Ji Nam of Cantor Fitzgerald upgraded

from Hold to Buy. The price target has also been raised from $4.00 to $5.50. The upgrade follows the company's acquisition of PersonalizeDx (PDx) from

. PDx was launched by Abbot about five years ago, as a CLIA laboratory that offers oncology testing services for community based oncologists, urologists and pathologists. The lab primarily focused on testing for breast, lung, bladder and prostate cancer. PDx was able to generate sales of about $6.0 million for Abbot in 2014. This acquisition will increase Rosetta Genomics' lab capacity close to 29,000 square feet. "PDx not only provides immediate scale to ROSG's business, but brings strong top-line growth momentum (almost three-fold increase in 2014 revenue y/y, despite reimbursement challenges for FISH-based tests)," analyst Sung Ji Nam said. On the other hand, the company believes that PDx stands apart from the competition due to its focus on operational excellence and its depth of expertise in the specific types of cancer it focuses on. Rosetta Genomics also feels that there are product synergies that can be exploited, specifically in terms of lung and urologic cancer. The combined entity intends to launch five new, proprietary assays in the next 12 months. "We think the transaction cost (~$3.5mm including $2mm in cash plus 500,000 of ROSG shares, or ~0.5x 2014 sales) compares favorably with some of the other recent, comparable deals in the diagnostic space," JP Morgan added.