BTIG downgrades NeoGenomics to neutral

BTIG Research downgraded NeoGenomics (NASDAQ:NEO) to “neutral” from “buy.” The stock closed at $9.05 on Tuesday.

Analyst Dr. Sean Lavin writes that second quarter results were largely in-line. “The base business continues to trend well and with more clarity around Medicare in 2017, we think downside risk is fairly modest,” he said.

“[NeoGenomics’] shares have been hovering near our price target and while we hoped Q2 might exceed expectations, allowing us to raise it again, that did not occur. At this time, we see valuation as fair and we don’t see enough near-term catalysts to drive meaningful upside,” he added. 

Shares of NeoGenomics have risen 70% in less than a year. “Our buy thesis had been predicated on continued share gains, stable reimbursement, and attractive valuation – all of which have largely played out via a transformative acquisition and better Medicare reimbursement,” Dr. Gavin pointed out.

“We remain positive on the base NeoGenomics business and think downside risk is fairly modest,” he added. “But we do not see enough near-term catalysts to drive meaningful upside from here; and with valuation fair, are less constructive on shares.”