NTRA - Natera Myriad upgraded as Raymond James reviews genetic testing space

The shares of Natera ( NASDAQ: NTRA ) and Myriad Genetics ( NASDAQ: MYGN ) climbed, and those of Exact Sciences ( NASDAQ: EXAS ) and Veracyte ( NASDAQ: VCYT ) fell in pre-market Wednesday after Raymond James changed its ratings in the gene-based diagnostic space.

The analysts led by Andrew Cooper upgraded Natera ( NTRA ) to Outperform from Market Perform, citing its near-term and intermediate-term growth trajectory and a "catalyst-rich setup" for this year.

The team, setting a $58 per share target on the stock, highlights the company's leadership in the market for minimal residual disease (MRD) and its "increasingly profitable" women's health segment, which, according to analysts, "has its own catalysts" around 22q buzz.

In Upgrading Myriad Genetics ( MYGN ) to Outperform from Market Perform, the analysts acknowledged that the company has the slowest revenue growth in the group but is positioned to achieve a double-digit topline target.

"….we think 2023 represents the year when Myriad can finally show a steadier trajectory approaching the double-digit topline goal while at the same time launching or materially progressing key products," Cooper and the team wrote.

"At these levels, we don't think Myriad needs home runs, but can actually outperform with singles and doubles," they added, with a $25 price target on the stock.

Raymond James cites valuation as the reason to downgrade Exact ( EXAS ) to Market Perform from Outperform. The analysts note that the company shares have added more than 50% since rival Guardant Health ( GH ) posted disappointing data for a blood-based cancer screening test last month.

"…the catalysts in 2023 are, in our view, not the kind that dramatically change the P&L, and the biggest sentiment shift has already likely occurred," the analysts reasoned, removing the previous $60 per share target on Exact ( EXAS ).

Raymond James remains Market Perform on Guardant ( GH ) citing no major catalysts over the next 12-months.

“While we think Reveal should not be overlooked and Shield still has a place in a huge market, we expect neither to drive major upside to the P&L nor a major sentiment shift,” the team wrote referring to two of Guardant’s ( GH ) blood-based cancer screening tests.

The firm downgraded Veracyte ( VCYT ) to Market Perform from Outperform, arguing that its current valuation already reflects its near and intermediate-term trajectory.

While noting that the business has indicated "healthy growth overall," the analysts question how long the company can exceed expectations for its Decipher franchise.

Seeking Alpha contributor Bashar Issa argues that Veracyte ( VCYT ) has achieved "significant market shares" for its Afirma Thyroid and Decipher Prostate tests, but unlike rivals, without much impact on its cashflows.

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