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Strong Start to 2018 for Diagnostics Companies' Stocks

NEW YORK (360Dx) – The year got off to an auspicious beginning for many diagnostics firms as the 360Dx Index grew more than 8 percent month over month in January. 

Overall, 17 companies' share prices rose last month, while eight firms' stock prices dropped, as the index rebounded after a decline of nearly 3 percent in December. 

The 360Dx Index also surpassed the performance of the broader markets. The Dow Jones Industrial Average was up 6 percent month over month in January, while the Nasdaq Composite and the Nasdaq Biotech each rose 7 percent.

Leading the gainers was GenMark Diagnostics, whose stock price grew more than 30 percent month over month, followed by Thermo Fisher Scientific (+18 percent) and Natera (+16 percent). Invitae (-24 percent) had the biggest month-over-month drop, while shares of Oxford Immunotec (-17 percent) and NeoGenomics (-13 percent) also retreated by double-digit percentage points.

GenMark's share-price boost was driven by a decision by the largest bank in the US, JP Morgan Chase, to up its stake in the molecular diagnostic testing firm. In a document filed on Jan. 22 with the US Securities and Exchange Commission, GenMark disclosed the bank had taken a greater-than-5-percent ownership stake in the company, prompting a 4 percent gain in GenMark's share price, with the trading volume on its stock up nearly fivefold for the day.

On Jan. 23, GenMark's stock price closed with a 15 percent gain.

Earlier in the month, the company also said that its preliminary fourth quarter and full-year 2017 revenues would beat the consensus Wall Street estimates, and at the 36th annual JP Morgan Healthcare Conference, it announced a new platform, the ePlex NP, a scaled down version of its ePlex system, which will be targeted at smaller hospitals and integrated delivery networks.

Thermo Fisher's share price climbed steadily throughout January. The company began the month by announcing a deal with Illumina to make its AmpliSeq chemistry compatible with Illumina's sequencers, while it also launched two new sequencers. It ended the month by announcing its Q4 2017 revenues jumped 22 percent year over year and beat the consensus Wall Street estimates on the top and bottom lines.

Meantime, Natera's increase happened without any obvious drivers, though CEO Matt Rabinowitz said at the JP Morgan conference that the firm had signed deals with eight unnamed drug developers for use of the company's cell-free DNA assay called Signatera, with a handful of additional deals in the works.

Among the decliners, Invitae said in early January that it anticipates its full-year 2017 revenues to more than double to $59 million. However, that would still leave the firm short of analysts' average revenue estimate of $68.1 million, and on the day of Invitae's preannouncement, its shares dropped 14 percent.  

At the JP Morgan conference, Invitae CEO Sean George said the genetic testing market needs a new business model that would bring genomics into healthcare. During the next two years, he told investors, the company would build a new industry based on genomic data management and the creation of entire networks of data, patients, doctors, and healthcare systems.

That failed to impress investors, and on the same day, Invitae's stock price retreated 4 percent.

A preliminary earnings announcement also precipitated a sell-off of Oxford Immunotec's shares. Early in the month, the company lowered its Q4 revenue range, which also would fall short of the consensus Wall Street estimate. Investors responded by driving down its stock price 19 percent on the day of the preannouncement on heavy trading.

NeoGenomics' share-price decline had no obvious drivers as its stock price fell steadily throughout the month.