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Genomic Health Upgraded to Overweight by Piper Jaffray

NEW YORK (GenomeWeb) – Investment bank Piper Jaffray has upgraded its rating on Genomic Health's stock to overweight, maintaining a price target for shares of $72, based on an assessment of the current pace of the company's business ahead of a German reimbursement decision that is expected to finalize today.

In a note to investors, analyst William Quirk said that the company's stock has been off significantly since it announced its Q1 earnings, necessitating the rating upgrade to maintain the existing price target.

"We have higher confidence in German reimbursement as well as continued US growth following our travels with management," he wrote.

According to Quirk, Genomic Health management continues to be "upbeat" about expanding penetration of its Oncotype DX breast cancer testing in the US, augmented by a digital direct marketing program that is now at its "halfway point."

The program includes in-office ads as well as targeted placement of Oncotype DX information on select websites.

In Germany, Quirk added that Genomic Health is expecting to receive a final reimbursement decision today from the independent Institute for Quality and Efficiency in Health Care (IQWiG), which recommends "test/procedures/drugs/guidelines for the main public reimbursement group in Germany," covering about 85 percent of the country's population.

"We believe Germany represents [approximately] 40,000 additional tests, or a $120M-$160M market," Quirk wrote. "Should they get a favorable decision, we understand the national payment level would likely go into effect January 2020, although Genomic Health could start billing for tests delivered in several months," he added.

"With stock off 18 percent since [Q1 results were reported] and 41 percent since its peak earlier this year, we believe the valuation is attractive at current levels," Quirk concluded.

Shares of Genomic Health rose about 2 percent to $55.34 in Thursday morning trade on the Nasdaq.