Needham analyst Michael Matson reiterated a Buy rating on NeoGenomics (NEO – Research Report) today and set a price target of $19.00.
Michael Matson has given his Buy rating due to a combination of factors impacting NeoGenomics’s financial performance and market position. The company’s first-quarter revenue and EBITDA for 2024 surpassed consensus expectations, with a significant improvement in revenue growth compared to the previous quarter. This uptick in growth was primarily fueled by an impressive 50% increase in next-generation sequencing (NGS) testing, which is a key driver for the company’s Clinical Services segment. Additionally, NeoGenomics has been consistently increasing revenue per test for the past twelve quarters, indicating a robust pricing strategy and growing demand for its NGS offerings, such as the Neo Comprehensive test suite.
Moreover, Matson’s positive outlook is reinforced by NeoGenomics’s improved profitability metrics, with a noticeable year-over-year rise in adjusted gross margin and an even more substantial increase in the adjusted EBITDA margin. These improvements suggest that the company is not only expanding its top line but also enhancing its operational efficiency, which bodes well for future earnings potential. Despite a lowered price target, reflecting broader market valuation trends, Matson maintains his confidence in NeoGenomics’s growth trajectory and market opportunities, underpinning his Buy recommendation.
Based on the recent corporate insider activity of 12 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of NEO in relation to earlier this year.
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NeoGenomics (NEO) Company Description:
NeoGenomics, Inc. is a clinical laboratory, which specializes in cancer genetics diagnostic testing and pharma services. It operates through the following two segments: Clinical and Pharma Services. The Clinical Services segment offers clinical cancer testing services to community-based pathologists. The Pharma Services segments supports pharmaceutical firms in their drug development programs by supporting various clinical trials and research. The Clinical Services Segment provides various clinical testing services to community-based pathology practices, hospital pathology labs and academic centers with reimbursement from various payers including client direct billing, commercial insurance, Medicare and other government payers, and patients. The Pharma Services segment: provides comprehensive testing services in supports pharmaceutical clients’ oncology programs from discovery to commercialization. Its services include cytogenetics, fluorescence in-situ hybridization, flow cytometry, immunohistochemistry, anatomic pathology and molecular genetic testing. The company was founded by Michael T. Dent on October 29, 1998 and is headquartered in Fort Myers, FL.
