What: Shares of NeoGenomics (NASDAQ:NEO), a laboratory-based company that operates a handful of cancer-focused genetic and molecular testing facilities for hospitals, oncologists, pathologists and urologists, shot higher by as much as 14% during Monday's trading session after receiving a before-the-bell price target hike.
So what: Based on a research note released this morning from investment banking firm Craig Hallum, the firm lifted its price target on NeoGenomics by 25%, to $10 from its prior target of $8 per share. The price target hike comes just a few days after NeoGenomics reported its third-quarter earnings results, which wound up meeting Wall Street's projections. For the quarter, NeoGenomics delivered a 25% growth in base test volume, an 8% rise in consolidated revenue, a 12.5% reduction in test costs, and overall breakeven EPS on $25.1 million in sales.
Now what: Today's move is certainly pleasant for optimists of NeoGenomics, but it's important to keep in mind that research firm rating and price target changes rarely have any substantive long-term effect on a stock's price. It's never a bad idea to sometimes dig deeper to find out what factors may have prompted an investment firm to change its price target and/or rating on a company to see if there's something going on with the bigger picture, but it's almost never a good idea to let analyst actions guide your investment thesis.
Looking longer term, NeoGenomics is sitting in a very exciting niche that could be about to explode thanks to the rise of personalized medicine. With the World Health Organization predicting that the rate of global cancer incidence will rise by nearly 60% over the coming two decades, the need to identify proteins and genetic markers that are unique to certain people could be the difference between offering cancer patients medical care and giving them the optimal medicine for their specific cancer. NeoGenomics and its testing facilities could play a key role in that, and for that reason, I would certainly suggest adding this company to your watchlist.
Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.
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