Leerink ups T2 Biosystems to OP; PT to $12

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Leerink upgraded T2 Biosystems (NASDAQ:TTOO) to “outperform” from “market perform” and raised its price target to $12 from $5. The stock closed at $7.74 on May 31.

Analyst Puneet Souda writes that this week's T2bacteria FDA clearance expands T2's market opportunity dramatically from $1.4-billion to more than $3-billion. T2 is a medical diagnostic company.

“T2 is highly underpenetrated in its core markets, but with the clearance in hand, T2 can now penetrate the broader $1.5-billion to $2-billion bacterial sepsis market with an immediate entry into hospital emergency departments - a $300-million market where the need is even more acute,” he added.

Mr. Souda also sees upside in further menu expansion into T2Lyme, Candida auris, CARB-X and Allergan collaborations - none of which are reflected in his or Street estimates.

“We believe the company's guidance could be conservative in light of the instrument placement and test kits pull-thru,” he added.

Stephen Kilmer