Guardant Health (GH) Sell-Off Makes Neogenomics (NEO) Deal Less Likely - Needham & Company
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Needham & Company analyst Mike Matson reiterated a Buy rating and $55.00 price target on Neogenomics (NASDAQ: NEO) following reports Guardant Health (NYSE: GH) is weighing an offer to acquire NEO for an unknown amount.
The analyst notes the downside action in GH stock suggests investors are signaling that they do not like the potential deal and that makes a deal less likely.
The analyst commented, "NEO shares are trading higher today on a Bloomberg report that Guardant Health (GH - Not Rated) is weighing an offer to acquire NEO for an unknown amount. GH shares, in contrast, are trading down significantly, so GH shareholders seem to be signaling that they do not like the potential deal, and we think this reaction reduces the likelihood that it happens considering that it would likely require a sizeable stock component. Nonetheless, we believe that the primary benefit of the deal to GH would be the ability to sell its liquid biopsy tests through NEO's extensive distribution channel. The deal would also significantly expand GH's test menu beyond its liquid biopsy tests by adding NEO's comprehensive "one-stop shop" cancer test offering. We note that there is some minor overlap with NEO's liquid biopsy offerings including its InVisionFirst-Lung, RaDaR, and NeoLab assays."
Shares of Neogenomics closed at $48.24 yesterday.
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