It’s time to buy Adaptive Biotechnologies in its promising immune-scanning business, according to Piper Sandler. Analyst David Westenberg upgraded the stock to overweight from neutral, saying it could almost double from here on the company’s minimal remaining disease-testing business. MRD can screen for blood cancer by getting an accurate count of malignant and healthy cells. “If the company can grow MRD revenue by 50% (as they expect and we model in 2023), we think the stock would merit a ~10X earnings multiple on its MRD business,” Westenberg wrote in a note. of Wednesday. “We are adjusting our estimates to a slightly higher consensus.” The analyst expects that the total addressable market for the minimal residual disease business could be in the “tens of billions,” and he predicts it will grow in the “high double digits” for the next five years. Furthermore, Adaptive Biotechnologies has a competitive position in the market. The analyst expects the stock, which has fallen nearly 75% in 2022, could rebound next year on the strength of this growing business as well as its partnerships. The analyst’s $14 price target, up from $7.50, represents roughly 97% upside from Tuesday’s closing price of $7.09. Shares jumped 13.5% on Wednesday. “At this point, we think the long-term ‘dream-dream’ of an annual immune system scan represents a free call option,” Westenberg wrote. “We understand that long-term assets/high terminal value are out of favor, but we like the valuation after a rough 2022 year and the potential near-term takeover of MRD,” the analyst said. — CNBC’s Michael Bloom contributed to this report.
