By Sam Boughedda
A Needham & Company analyst downgraded shares of NeoGenomics (NASDAQ:NEO) to Hold from Buy, removing the previous $16 per share price target on the stock.
The analyst said in a research note that the company's turnaround appears daunting, and RaDaR is likely to take time. RaDaR is the company's liquid biopsy assay that tracks a set of up to 48 tumor-specific variants in a patient using a blood draw.
"NEO's turnaround is likely to take several years in our view, and we believe that its recently announced Project Catalyst is only an initial step. With Project Catalyst expected to last 18 months, we expect 2023 to be a transition year and believe that consensus revenue estimates are too high for both 2023 and 2024," wrote the analyst.
The analyst added that the company has several significant issues to address, including its revenue growth slowdown, its gross margin contraction, and its ballooning operating expenses.
"While NEO's RaDaR minimal residual disease (MRD) test could ultimately prove to be accretive to NEO's growth, we expect sales to be limited in 2023. Given all of this, which we think will eventually translate to high single-digit revenue growth, we believe that NEO shares are fairly valued," he concluded.
NeoGenomics shares tumbled more than 6% during Monday's session.