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BTIG Initiates Coverage of Cue Health With Buy Rating

NEW YORK – Investment bank BTIG initiated coverage of point-of-care diagnostic firm Cue Health on Tuesday with a Buy rating and a price target of $18 on its shares.

Analyst Mark Massaro wrote in a note that the San Diego-based firm is well positioned to take shares from reference labs and other point-of-care testing companies and will help "expand the $80 [billion] US lab testing pie."

Cue's handheld instrument "drives much better ease of use, particularly when used in people's homes," Massaro said, and BTIG models the company to exceed $500 million in revenue in its first full year, making it "one of the fastest growing diagnostic testing companies we've ever seen."

The firm's COVID-19 nucleic acid amplification test was the first molecular test to receive Emergency Use Authorization by the US Food and Drug Administration for home use without a prescription in March.

In his note, Massaro wrote that the home-use authorization of the Cue Health Monitoring System and the firm's COVID-19 test by the FDA, along with the test's ability to connect to smartphones, could "help drive new sources of applications, including telemedicine use (following receipt of a test result), virtual drug prescriptions, and more over time." 

Cue Health went public in September in a $200 million offering of 12.5 million shares priced at $16 per share. In its Form S-1 filing for its IPO, the company said it is developing other tests for its instrument, including five kits in late-stage technical development: influenza A/B, respiratory syncytial virus, fertility, pregnancy, and inflammation.