On Tuesday, Citi updated its stance on 23andMe Holding Co (NASDAQ:ME), increasing the price target to $0.63 from the previous $0.47 while maintaining a Neutral rating on the stock. The adjustment follows a review of the company's fourth quarter and full-year financials for the 2024 fiscal year.
The firm's valuation model for 23andMe is a sum-of-the-parts analysis, considering both the commercial business and the potential drug discovery platform. The commercial aspect is valued based on a 1.0x enterprise value to calendar year 2024 gross profit multiple. The platform's worth is estimated by calculating the net present value (NPV) of projected future therapies, applying a 3x multiple to the probability-adjusted peak sales of each potential new therapy.
Citi's updated model reflects refined revenue assumptions for 23andMe's consumer and research services business, alongside adjusted operating expense expectations. These revisions underpin the new price target of $0.63.
The analysis by Citi provides an updated financial perspective on 23andMe, factoring in the latest actuals and projections for the company's operations. The maintained Neutral rating indicates that, while the firm recognizes changes in the company's financial outlook, it does not suggest a change in investment stance at this time.
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