Original from Genomeweb
JP Morgan and Cowen said on Monday they have initiated coverage of shares of Singular Genomics Systems.
JP Morgan gave the shares an Overweight rating and a price target of $30 while Cowen gave them an Outperform rating.
"With a differentiated technology and strong intellectual property position, unique value propositions in target applications, a large $44 billion total addressable market across sequencing, single-cell and spatial analysis, and proteomics, [Singular Genomics] has an encouraging prospect of driving attractive revenue growth and margin expansion, and we believe solid commercial progress will drive multiple expansion over time," JP Morgan analyst Tycho Peterson wrote in a note to investors.
Cowen analyst Doug Schenkel valued the potential market for Singular Genomics even higher, at nearly $50 billion. "We believe the opportunity for alternatives to the top sequencing incumbent in this market segment has never been better," he wrote.
San Diego-based Singular Genomics went public last month and raised gross proceeds of $258 million in an upsized IPO. The firm is planning to offer several DNA sequencings instruments, including its G4 platform for benchtop sequencing and PX instrument for single-cell and multiomics applications.
Schenkel hedged his optimism by noting "that the history of next-generation sequencing is littered with numerous companies that presented and compared their targeted future product specs to current Illumina product specs, only to come up short while Illumina advanced further."
Singular Genomics must buck this trend, he said, even in the face of other emerging competitors and any defensive response from Illumina.
"That said, we believe the 'scarcity value' associated with a successful sequencing (and multi-omics) platform (for investors and strategics) could be notable ... assuming the platform achieves performance targets, is adopted, in particular by clinical profiling customers, and can withstand intellectual property challenges," he wrote.
The company "does not yet have commercial product on the market, and currently demonstrated product performance is still below targeted specifications," Peterson noted while laying out the risks of investing in the company. "Failure to achieve target specifications and launch products on time will significantly impair the growth prospects and investment thesis." Instrument placements may also be lumpy, he said.
In morning trading on the Nasdaq, shares of Singular Genomics were flat at $23.66.
