Morgan Stanley analyst Tejas Savant maintained a Hold rating on Adaptive Biotechnologies (ADPT – Research Report) today and set a price target of $7.00.
Tejas Savant has given his Hold rating due to a combination of factors impacting Adaptive Biotechnologies. In the fourth quarter of 2023, the company experienced a slight shortfall in revenue, particularly in the minimal residual disease (MRD) segment, which did not meet Morgan Stanley’s or the broader market’s expectations. Despite an increase in clinical volumes, the revenue from MRD was less than anticipated due to a decrease in pharmaceutical services and regulatory milestones revenues. Additionally, although the Immune Medicine segment’s revenue declined year-over-year, it slightly exceeded Morgan Stanley’s forecasts. Savant’s cautious stance is further supported by the overall decrease in operating expenses, excluding a significant lease impairment charge, and a decline in gross margins year-over-year, attributed primarily to lower amortization and the absence of high-margin milestone payments.
Furthermore, the ongoing strategic review of Adaptive Biotechnologies, set to conclude by the end of the first quarter of 2024, introduces a degree of uncertainty that justifies the Hold rating. While management has expressed optimism about potential outcomes, the details remain undisclosed, creating a wait-and-see situation for investors. On a positive note, the MRD business has seen robust growth in clinical testing revenue, driven by a significant increase in ClonoSEQ volume and improvement in average selling prices. The growth across all marketed indications and the increase in ordering healthcare providers and accounts are encouraging signs. However, the modest year-end biopharma backlog decrease compared to the third quarter levels tempers this optimism and contributes to Savant’s decision to maintain a Hold rating at this time.
According to TipRanks, Savant is an analyst with an average return of -7.3% and a 38.58% success rate. Savant covers the Healthcare sector, focusing on stocks such as Adaptive Biotechnologies, Charles River Labs, and Hologic.
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Adaptive Biotechnologies (ADPT) Company Description:
Adaptive Biotechnologies Corp. engages in the development of an immune medicine platform. It harnesses the inherent biology of the adaptive immune system to transform the diagnosis and treatment of disease. Its products and services include immunoSEQ, clonoSEQ, cellular therapy, and vaccines. The company was founded by Chad Robins, Harlan Robins, and Chris Carlson in September 2009 and is headquartered in Seattle, WA.
Read More on ADPT:
- Adaptive Biotechnologies sees FY24 operating expenses $360M-$370M
- Adaptive Biotechnologies reports Q4 EPS (48c), consensus (33c)
- Adaptive Biotechnologies Reports Fourth Quarter and Full Year 2023 Financial Results
- Adaptive Biotechnologies (ADPT) Q4 Earnings Cheat Sheet
- Adaptive Biotechnologies to Report Fourth Quarter and Full Year 2023 Financial Results on February 14, 2024
