T2 Biosystems Cut From Buy To Sell At BTIG

BTIG’s Karen Koski expressed concern regarding T2 Biosystems Inc TTOO, which reported another quarter of weak T2Dx placement, as well as cartridge manufacturing issues, extended timeline for the completion of the T2Bacteria trial and the mixed commentary at ASM.

Koski downgraded the rating on the company from Buy to Sell, while lowering the price target from $12 to $4.

Expectations Proven Wrong

The analyst mentioned the earlier expectations had been for T2 Biosystems’ T2MR technology being worth more than the company’s market cap and optimism regarding the market opportunity for T2Bacteria.

Several quarters of lower-than-expected placements, along with recent checks, suggest that the commercialization of T2Candida would be challenging due to pricing.

Related Link: GenMark, T2 And Accelerate Diagnostics Impress Analysts At Microbiology Forum

On the other hand, the earlier expectations that T2 Biosystems’ platform would address an important unmet need and optimism regarding T2Bacteria and potential for M&A have been proved wrong, the analyst said.

“We did not foresee cartridge manufacturing issues, a multi-quarter delay in the T2Bacteria launch, or multiple catalysts skewed to the downside,” Koski pointed out.

Selloff Expected

The analyst expects the stock to see a sell off on July 8, with additional potential negative catalysts expected for 2017.

“"While we still think a takeout is possible, we'd expect potential acquirers to await a more favorable opportunity," Koski added.