BTIG cuts NeoGenomics to neutral

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BTIG downgraded NeoGenomics (NASDAQ:NEO) to “neutral” from “buy,” citing hurricanes that have hit Texas and Florida and noting that the shares are near its $11 price target, almost reaching an all-time high. The stock closed at $10.64 on Sept. 8.

NeoGenomics is a cancer diagnostics and pharma services company. Two of the company’s major labs are in Fort Myers, FL and Houston, TX.

Analyst Dr. Sean Lavin writes that he confirmed the company had an action plan to re-route specimens ahead of Hurricane Irma but sustained damage in the surrounding areas could potentially be disruptive. In Texas, he said it’s possible that temporary facility closures also might impact turnaround times.

While it’s impossible to tell how much damage the Florida plant may sustain, he said that given the high fixed cost nature of the business, he could be tough to find an EBITDA offset.

“As we consider the potential for soft third quarter revenue given the company’s heavy exposure to Texas and Florida, the potential for long-term damage to facilities in Florida (we will hope for the best but must consider the worst outcome) and the lack of material near-term catalysts, we feel neutral is now the proper rating,” he added.