On Thursday, Needham, a financial services firm, increased its stock price target for Personalis Inc (NASDAQ:PSNL) to $3.50 from the previous $2.30. The firm has reiterated its Buy rating on the stock.
The decision follows Personalis' fourth-quarter 2023 earnings report, which aligned with the revenue figures preannounced on January 5, 2024, but fell short of the consensus earnings per share (EPS) expectations. Management's guidance for 2024 revenue is in line with consensus estimates.
Personalis, a company specializing in advanced genomic sequencing, saw its revenue growth decelerate to 18% in the fourth quarter of 2023, down from 23% in the third quarter.
Despite the slowdown, growth in oncology services showed improvement, while revenue growth from the VA Million Veteran Program (VA MVP) slowed. The company successfully secured reimbursement for its NeXT Dx test in the fourth quarter of 2023.
Looking ahead, Personalis plans to submit for reimbursement of its NeXT Personal minimal residual disease (MRD) test in 2024. The company has strategic plans to focus on early-stage breast and lung cancers, as well as immunotherapy monitoring with the NeXT Personal test.
This forward-looking approach is part of the rationale behind Needham's price target increase and the maintenance of the Buy rating.
Needham's valuation of Personalis shares now rests on the firm's 2025 sales estimate. This shift in valuation basis underscores the firm's confidence in Personalis' long-term growth trajectory, despite the recent earnings per share miss and the deceleration in revenue growth. The company's strategic initiatives, particularly in the oncology field, are expected to contribute to its future performance.
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