Why Aegis Capital Loves Signal Genetics

• In a report issued Tuesday, Aegis Capital analyst Ashok Kumar reiterated a Buy rating on shares of Signal Genetics Inc SGNL.
• The expert issued a $3 price target based on a discounted cash flows (DCF) analysis.
• According to the research note, the company’s “Growth strategy is predicated on broadening of coverage policy.”

Aegis Capital issued a Buy rating on shares of Signal Genetics on Tuesday. The report pointed out that, for the 9 months ending on September 30, the company reported revenue of $1.9 million and net loss of $8.3 million. Cash and cash equivalents of $12.1 million implied an increase from the $5.1 million reported by the end of 2014. Finally, working capital reached $11.5 million.

Related Link: Signal Genetics' MyPRS(R) Highlighted in the Journal Leukemia

While the firm envisions sustained losses and negative cash flows, Signal’s management team expects the company to have enough cash on hand to support operations for another 12 to 15 months.

The Buy Thesis

At the end of the research note, the analysts explained why they are bullish on commercial stage, molecular genetic diagnostic company Signal Genetics:

Broad based take up of genomic technologies in the management of Multiple Myeloma have been impacted due to the variation between gene expression signatures, ambiguity in physician interpretation and the difficulty of obtaining adequate genetic material from limited patient specimens. But over time, the reproducibility of the MyPRS test to those obtained in academic research labs validate it as tool to predict outcome of disease in MM patients.

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.