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Cowen, William Blair, JP Morgan Initiate Coverage of Adaptive Biotechnologies

This story has been updated from a previous version to include information about JP Morgan initiating coverage of Adaptive Biotechnologies.

NEW YORK – Cowen and William Blair today initiated coverage of Adaptive Biotechnologies, both with Outperform ratings.

JP Morgan also initiated coverage with an Overweight rating and provided a price target of $45 per share.

In an investment note, analyst Brian Weinstein said the rating was "based on Adaptive's growth opportunities, near-term catalysts, the potential for upside to revenue targets, the uniqueness of the asset, and a valuation methodology that takes into consideration comps and a mix of multiples and a [discounted cash flow.]"

Cowen analyst Doug Schenkel added that the firm has a unique platform, an exciting pipeline, and a database that is growing in value, while JP Morgan analyst Tycho Peterson wrote that a premium valuation was justified by a "superior growth profile that could prove conservative in the medium term." 

The Seattle-based immune system profiling firm launched its $300 million IPO June 27, at a price of $20 per share. Immediately, shares shot up more than 90 percent. The firm offers a US Food and Drug Administration-authorized clinical immunosequencing assay called ClonoSeq, as well as the ImmunoSeq research assay and service. The company has partnerships with Microsoft and Genentech. 

Adaptive is a "potential game-changer" in diagnostics and therapeutics, Weinstein wrote, adding that its "technology holds the promise to enable researchers, commercial partners, and ultimately clinicians to better diagnose and treat disease."

He noted that the firm has "beachheads" in three key markets: life science research, diagnostics, and drug discovery. "Collaborations provide some validation of the approach the company is taking and set the business up for longer-term success," he added.

Weinstein also identified some risks for the firm. "[G]enerating commercially viable products from this technology is not a certainty," he wrote. The firm's Genentech deal was also hard to evaluate and the current reliance on partnership revenue could mean it may not hit revenue estimates every quarter "although if this were to happen, the full-year targets would likely not be affected," he wrote.

In afternoon trading on Nasdaq, shares of Adaptive were trading up 5 percent at $40.46.