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On Monday, BTIG analyst Mark Massaro maintained a Buy rating and a $17.00 price target on Neogenomics (NASDAQ:NEO) following the company’s acquisition announcement. Neogenomics reported the purchase of Pathline LLC, a private laboratory services firm based in New Jersey. The company, which generated revenue of $660.57 million in the last twelve months with 11.65% growth, continues its expansion strategy. After discussions with Neogenomics’ management, Massaro noted that Pathline brings in over $21 million in annual revenue and is expected to contribute positively to Neogenomics’ adjusted EBITDA by 2026.
The transaction, which will not alter Neogenomics’ 2025 revenue or EBITDA guidance, involves a payment of 0.5 times sales. This valuation is considered low compared to historical laboratory multiples. According to InvestingPro data, Neogenomics currently trades at a high EBITDA multiple, suggesting careful consideration of valuation metrics is crucial for investors. InvestingPro offers comprehensive valuation analysis and additional insights through its detailed Pro Research Reports. The acquisition is seen as strategic for Neogenomics, as it will establish a presence in the Northeastern United States, a region where the company currently has lower market penetration.
Neogenomics views the Pathline acquisition as a time-saving alternative to building a new laboratory, as it would have taken approximately two years to establish their own facility in the Northeast. Pathline’s existing accreditations, including CLIA/CAP and New York State accreditation, add to the acquisition’s appeal.
The deal is expected to aid Neogenomics in expanding its market share among hospital systems and academic medical centers in the Northeast. Massaro suggests that additional deal activity may be on the horizon for Neogenomics in the coming months.
Despite a 48% decrease in Neogenomics’ stock price since the CEO change announced in January, Massaro believes the current trading value at 1.8 times the Street’s 2026 revenues, which is below the average of approximately 4.0 times for the small to mid-cap clinical diagnostics peer group, indicates that the shares are oversold. Trading at $9.16, near its 52-week low of $8.98, InvestingPro analysis suggests the stock is currently fairly valued. The reiteration of the Buy rating and the $17 price target reflects BTIG’s positive outlook on Neogenomics’ stock, with analysts setting targets ranging from $16 to $26.
In other recent news, NeoGenomics has announced the acquisition of Pathline, a New Jersey-based laboratory specializing in pathology services. This strategic acquisition aims to strengthen NeoGenomics’ presence in the Northeastern United States. The company anticipates that integrating Pathline will contribute to incremental revenue growth and yield significant cost reductions, potentially boosting earnings before interest, taxes, depreciation, and amortization (AEBITDA) starting in 2026. In financial updates, NeoGenomics reported a fourth-quarter revenue of $172 million, slightly below the consensus estimate of $173.05 million, while full-year consolidated revenue rose 12% to $661 million. For 2025, the company projects revenue between $735 million and $745 million, aligning with the consensus.
Analysts have adjusted their outlooks on NeoGenomics, with BTIG and Morgan Stanley (NYSE:MS) both lowering the price target to $17 while maintaining a Buy and Equalweight rating, respectively. Needham also reduced its price target to $18 but retained a Buy rating, citing confidence in the company’s strategy despite recent challenges. The analysts noted the company’s consistent revenue growth and improvements in profitability metrics, such as adjusted gross margin and EBITDA. Additionally, NeoGenomics’ Next (LON:NXT) Generation Sequencing (NGS) remains a significant growth driver, representing over 30% of clinical revenue. Investors are closely monitoring the company’s product pipeline and strategic initiatives as it navigates recent executive changes and market conditions.
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