NEW YORK – Investment bank BTIG initiated coverage of genetic testing services company Sema4 on Friday, with a Buy rating and a price target of $12 on its shares.
In a note to investors, analyst Mark Massaro wrote that Sema4 has the potential to build the first precision medicine company to translate insights from genetic tests across various disease states into "AI-driven, mathematical, patient predictive algorithms that can lead to earlier detection of disease and earlier intervention," therefore improving patient outcomes and lowering healthcare system costs.
Sema4 currently possesses more than 12 million patient records and is running more than 250,000 next-generation sequencing tests a year, he added.
Massaro also believes there are opportunities for Sema4 to develop longitudinal patient health data in partnership with leading healthcare systems as well as with biopharma companies. He cited the company's expanding testing portfolio and its plans to be acquisitive as signs that it's "making the required investments to become the leader in 'big data healthcare.'"
Sema4's women's health tests include expanded carrier screening and noninvasive prenatal testing, and its oncology solutions include hereditary cancer testing, and whole-exome and transcriptome sequencing. The company is also likely to be a leading bidder for assets that will help it expand its menu in oncology testing, including in minimal residual disease.
Overall, Massaro said, Sema4's potential total addressable market is $2 billion in pregnancy, more than $100 billion in autoimmune disease, $171 billion in oncology, $176 billion in diabetes, and $194 billion in cardiovascular disease.
Sema4's shares rose nearly 5 percent to $8.24 in morning trading on the Nasdaq.