UPDATE: Rosetta Genomics (ROSG) Ramps On New Buy Rating; Analyst Sees 238% Upside

August 23, 2012 7:34 AM EDT
Get Alerts ROSG Hot Sheet
Price: $0.52 -5.45%

Rating Summary:
    3 Buy, 1 Hold, 0 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 13 | Down: 22 | New: 54
Trade ROSG Now!
Join SI Premium – FREE
(Updated - August 23, 2012 7:34 AM EDT)

Shares of Rosetta Genomics (NASDAQ: ROSG) are surging in pre-open trading Thursday after Aegis Capital initiates coverage on the stock with a Buy rating and aggressive $16 price target, suggesting 238 percent upside.

Analysts Raghuram Selvaraju, Ph.D. and Yi Chen, Ph.D. called Rosetta "one of the most overlooked names in the molecular diagnostics sector."

They said the stock trades at a negative enterprise value despite having secured value-based pricing reimbursement for its lead product, a diagnostic test aimed at pinpointing the origin of metastatic cancers. They also point investors to the fact that Rosetta is a forward-integrated firm with its own CLIA-certified laboratory, and has already launched four other diagnostic tests. Also, the firm is a world leader in the domain of microRNAs, which are garnering attention as one of the most important categories.

The microRNA-based intellectual property estate that the company has constructed could make the firm interesting to a potential acquirer, the pair argue.

Lead product, the mets test, is likely to be reimbursed by Medicare at the roughly $3,600 level versus its list price of price of $3,960. "We believe that this test could be the leader in its market - cancers of unknown primary origin (CUP)," the analyst said.

Now that Rosetta Genomics has secured coverage from Medicare it is launching the mets test again. To optimize the launch the company has partnered with Precision Therapeutics, which has a sales force of 35 reps. "We note that this test could potentially become as crucial to Rosetta as the Oncotype DX test is for Genomic Health (Nasdaq: GHDX)" (note: GHDX is a $1.1B company).

The analyst said the negative enterprise value for Rosetta is wholly unwarranted and they see "meaningful upside near-term." Also, given pro-forma cash of $31mm they see little need for an equity raise for at least the next five years.

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

Shares of Rosetta Genomics last traded at $5.60, up 18 percent.

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

You May Also Be Interested In

Related Categories

Hot New Coverage, Momentum Movers, New Coverage

Add Your Comment