JP Morgan Starts Accelerate Diagnostics, INC Research At Overweight

In separate reports, JPMorgan’s Tycho W. Peterson initiated coverage of both INC Research Holdings Inc INCR and Accelerate Diagnostics Inc AXDX with Overweight ratings, with price targets of $47 and $17, respectively.

INC Research

The company is a leader in the clinical research organization, or CRO, market, which is estimated at ~$50B. Biopharma companies are continuing to outsource “more work to fewer, more capable partners with global presence,” and INC Research remains poised to benefit from the trend, analyst Tycho Peterson said.

The company has a large and diverse global footprint, local knowledge and focuses exclusively on Phase I-IV clinical development and related services.

The analyst expects INC Research to generate double-digit top-line growth and mid-teens EPS growth over the next five years, since a “therapeutically focused business model, which brings deep expertise in the large and fast-growing markets of CNS, oncology and other complex diseases, aligns the company with high-growth verticals in biopharma R&D.”

Accelerate Diagnostics

Peterson believes that the company is poised for a successful commercial launch of the Accelerate ID/AST System and would be able to swiftly grow its install base. Accelerate Diagnostics has an experienced management team and is commercializing a “potentially disruptive technology into a large addressable market.”

The Centers for Disease Control and Prevention [CDC] estimates that at least 2M people per year become infected with antibiotic-resistant bacteria in the US alone, resulting in at least 23,000 deaths.

“With regards to AST [antibiotic susceptibility testing], we believe the ID/AST System and Blood Culture Assay Kit (currently in FDA trial) offer a meaningfully faster time to result (~5 hours post positive blood culture) relative to other available solutions,” the JPMorgan report noted.

Peterson expects the company to generate best-in-class revenue growth, with rapid margin expansion.