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On Wednesday, BTIG analyst Mark Massaro adjusted the price target for Sophia Genetics SA (NASDAQ: NASDAQ:SOPH) shares, bringing it down to $5.00 from the previous $6.00 while maintaining a Buy rating on the stock. The revision follows Sophia Genetics’ performance in 2024, where they reported a modest 4% growth in revenue alongside an 11% increase in volumes. This volume growth was offset by a 6-7% drop in revenue per analysis, primarily due to challenges faced with biopharma customers. The stock, currently trading at $3.11, has fallen nearly 16% in the past week, though InvestingPro data shows the company maintains a strong balance sheet with more cash than debt.
Despite the decline in revenue per analysis last year, Sophia Genetics has projected a return to double-digit revenue growth in 2025. The company’s optimism is rooted in its ability to engage new customers with its DDM platform, especially with the introduction of the MSK-Access liquid biopsy application. BTIG’s continued recommendation to buy is based on the expectation that Sophia Genetics will successfully attract new customers for its higher-priced applications. With a healthy current ratio of 3.71x and strong gross margins of 67%, the company appears well-positioned to fund its growth initiatives. (InvestingPro subscribers have access to 7 additional key insights about SOPH’s financial health.)
Management at Sophia Genetics has acknowledged that the timing of the DDM platform’s "go live" implementations is a critical factor for the company’s growth in 2025 and 2026. According to Massaro, the current trading price of SOPH shares at 1.5 times the lowered 2026 revenue estimate of $86 million, which reflects an 18% year-over-year increase, is below the average of the small cap peer group, which trades at approximately 2.0 times.
The company’s confidence in its DDM platform and its new applications, despite the setbacks in 2024, has led BTIG to reiterate its Buy rating. However, the firm has adjusted the price target to $5 to reflect the recent performance and market conditions.
In other recent news, Sophia Genetics reported its fourth-quarter 2024 earnings with an earnings per share (EPS) of -0.23, slightly missing the forecasted -0.21. The company achieved revenue of $17.7 million, which aligned with expectations, marking a 4% year-over-year increase. Despite the earnings miss, the company demonstrated resilience by expanding its platform analysis volume by 11% to 352,000 patients in 2024. Sophia Genetics is projecting revenue between $72 million and $76 million for 2025, indicating a growth rate of 10-17%. The company aims to achieve adjusted EBITDA breakeven by the end of 2026, with positive adjusted EBITDA expected in the second half of 2027. Additionally, Sophia Genetics highlighted new product launches and strategic expansions into new markets as part of its growth strategy. The company also announced significant new customer signings, including Mount Sinai in New York City, and an expanding presence in Japan through a collaboration with Genesis Healthcare (OTC:GENN).
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