Sequenom (SQNM) Price Target Raised to $5 at Wedbush

Wedbush maintained an Outperform rating on Sequenom (NASDAQ: SQNM) and raised its price target to $5.00 (from $4.00). Analyst Zarak Khurshid said news of a collaboration with Quest on MaterniT21 was an "unexpected and positive development."

"Under the agreement, Quest will begin offering the test in 3Q14, will handle the billing process and pays SQNM a set fee per test. As outlined in the 8k, Quest has agreed to exclusively use MaterniT21 and SQNM has agreed not to provide its test to any third-party publicly traded laboratory with over $1 B in annual sales (i.e., LabCorp). Additionally, SQNM granted Quest a royalty-bearing license to patents allowing the company to develop and validate its own test in-house, which Quest plans to introduce in 2015."

"Exclusive arrangement displaces competitor Natera and allows SQNM to regain clear US market leadership. As a reminder, Natera announced in early 2013 a distribution agreement with Quest which has been quite successful driving traction in the last 12 months. It is unclear why Quest’s decided to work with SQNM, but we suspect turnaround time, higher re-draw rates and the IP license royalty was a factor," added the analyst. "Adjusting model for the recent divestiture and Quest deal. Now 10% above 2015 consensus sales (apple to apples). We now assume 13k (+8%) and 60k (+34%) incremental tests and sales increases of 6% and 27% in 2014 and 2015 respectively. We also now assume full-year profitability in 2015."

For an analyst ratings summary and ratings history on Sequenom click here. For more ratings news on Sequenom click here.

Shares of Sequenom closed at $3.34 yesterday.

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