Street Calls of the Week
On Tuesday, Scotiabank (TSX:BNS) analyst Sung Niam revised the price target for Quanterix Corp. (NASDAQ: NASDAQ:QTRX) shares, reducing it to $18.00 from the previous $28.00. Despite this adjustment, the analyst continues to hold a Sector Outperform rating on the company’s stock. According to InvestingPro data, the stock currently trades at $7.19, with analyst targets ranging from $10 to $18, suggesting significant potential upside. InvestingPro analysis indicates the stock is currently undervalued based on its Fair Value model.
Quanterix experienced a stronger revenue growth performance compared to its peers in FY24, with InvestingPro data showing 12.3% revenue growth in the last twelve months. Yet the company’s shares have declined 45.32% over the past six months and 68% over the last year. The recent underperformance is believed to be influenced, at least in part, by the company’s announcement on January 10 to acquire Akoya Biosciences in an all-stock transaction, which is anticipated to be finalized in the second quarter of 2025. Despite market concerns, InvestingPro’s Financial Health Score remains GOOD at 2.67, suggesting underlying stability.
The revised price target reflects concerns about the near-term uncertainty surrounding U.S. academic funding, which impacts Quanterix due to its 20-25% revenue exposure to U.S. academic customers. The company’s exposure to direct NIH spending is minimal. Additionally, the market’s current reaction to the Akoya Biosciences acquisition appears to be unfavorable. However, InvestingPro data shows the company maintains strong financial flexibility with a healthy current ratio of 8.66 and more cash than debt on its balance sheet, providing a buffer during this transition period. Get access to 7 more exclusive InvestingPro Tips and comprehensive valuation analysis for Quanterix through the Pro Research Report.
Despite these challenges, Quanterix forecasts approximately $40 million in operating synergies by the end of 2026, with positive cash flow expected in 2026, a year earlier than if it remained standalone. The company also projects roughly $1 billion in revenues and 15% EBIT margins five years after the deal closes. While Scotiabank views the operating synergy targets as reasonable, there is less certainty regarding the long-term top-line growth potential for the combined entity.
The new $18 price target is based on a discounted cash flow (DCF) analysis and implies approximately 2 times the 2026 estimated enterprise value-to-sales ratio, which is about a 20% discount to the peer group average. Despite the reduced price target, Scotiabank maintains its Sector Outperform rating, indicating continued optimism about the company’s performance within its sector.
In other recent news, Quanterix Corporation reported its fourth-quarter 2024 earnings, revealing an earnings per share (EPS) of -$0.30, which fell short of the forecasted -$0.23. However, the company’s revenue reached $35.16 million, closely aligning with expectations of $35.25 million and marking an 11% year-over-year growth. Canaccord Genuity adjusted Quanterix’s stock price target to $15 from $20 while maintaining a Buy rating, following the company’s earnings results and ongoing merger with Akoya Biosciences. The merger aims to enhance Quanterix’s market capabilities, particularly in immunology and oncology, despite potential challenges from U.S. academic funding constraints. Analysts from Canaccord remain optimistic about Quanterix’s valuation and potential for double-digit revenue growth, despite acknowledging possible investor concerns related to the merger. Quanterix’s management has cautioned that academic funding challenges may impact financial performance, leading to adjustments in projections. The company launched 20 new assays in 2024, reflecting strategic expansion efforts in the diagnostics market. Looking forward, Quanterix projects revenue growth between $140 million and $146 million for 2025, despite anticipating a decline in U.S. academic revenues.
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