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On Friday, Needham maintained a Buy rating on Personalis (NASDAQ:PSNL) but reduced the price target to $7.00 from the previous $7.25. The adjustment follows the company’s fourth quarter 2024 performance, where revenue aligned with preannouncements and earnings per share (EPS) surpassed consensus expectations. According to InvestingPro data, the stock appears overvalued at its current price of $4.24, despite showing remarkable resilience with a 190% return over the past year. Personalis, a cancer genomics company, experienced a slowdown in revenue growth, reporting a 15% decline in the fourth quarter of 2024 compared to a 41% growth in the third quarter of the same year.
The decline in revenue growth was attributed to reduced growth in the Oncology sector, further impacted by a decrease in the Veterans Affairs Million Veteran Program (VA MVP) growth. Despite the slowdown, Personalis reported a significant increase in its test sequencing activities, with 1,441 NeXT Dx and NeXT Personal tests completed in the fourth quarter of 2024, marking a 53% increase from 945 tests in the previous quarter.
Personalis has also continued its collaboration with Tempus, a technology company advancing precision medicine through the practical application of artificial intelligence in healthcare. The partnership aims to commercialize the NeXT Personal test. Personalis reiterated its expectation to receive at least two positive reimbursement decisions for NeXT Personal in 2025, which is anticipated to provide a significant boost to the company’s commercial prospects.
In preparation for the potential reimbursement approvals for NeXT Personal in the second half of 2025, Personalis is increasing its cash burn to enhance its commercial capabilities. While InvestingPro data indicates the company is quickly burning through cash, it maintains a strong liquidity position with a current ratio of 4.68, suggesting adequate resources to fund its commercial expansion. This strategic move is aimed at positioning the company to capitalize on the expected market opportunities following the reimbursement decisions. Get access to the comprehensive Pro Research Report for deeper insights into Personalis’s financial strategy and growth potential. Despite the reduced revenue estimates prompting the price target adjustment, Needham’s stance on Personalis remains positive, as reflected in the maintained Buy rating.
In other recent news, Personalis Inc . reported its fourth-quarter 2024 financial results, revealing a narrower-than-expected loss. The company’s earnings per share (EPS) were -$0.23, surpassing analysts’ predictions of -$0.29. However, the company experienced a 15% year-over-year decline in revenue, totaling $16.8 million for the quarter. Despite the earnings beat, the decrease in revenue raises concerns about future growth, reflecting broader market trends. Personalis continues to focus on the Minimal Residual Disease (MRD) testing market, aiming for significant reimbursement milestones in 2025. The company plans to achieve reimbursement for at least two indications by the end of 2025. Personalis projects 2025 revenue between $80 million and $90 million, anticipating a growth rate of 31% at the midpoint. Analyst firms like Lake Street and Morgan Stanley (NYSE:MS) have been monitoring these developments, highlighting the company’s strategic focus and financial performance.
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