Now is the time to buy Adaptive Biotechnologies, according to Piper Sandler, on its promising immune-scanning business. Analyst David Westenberg upgraded the stock from neutral to overweight, saying it could nearly double on the company’s small remaining diagnostics business. MRD can diagnose blood cancer by getting an accurate count of both 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 is worth a ~10X earnings multiple on the MRD business,” Westenberg wrote in a Wednesday note. “We are revising our estimates slightly above consensus.” The analyst expects the total addressable market for the small residual disease business to be in the “tens of billions” and predicts it will grow in the “high double digits” over the next five years. Moreover, adaptive biotechnology has a competitive position in the market. The analyst expects that by 2022 nearly 75% of the shares will be recovered next year on the strength of this growing business and its partnerships. The analyst’s price target of $14 is up from $7.50, a 97% increase from Tuesday’s closing price of $7.09. Shares rose 13.5 percent on Wednesday. “At this time, we think the long-held ‘dream’ annual immune system scan represents a free call option,” Westenberg wrote. “We recognize that long duration/high terminal value assets are undervalued,” said the analyst. —CNBC’s Michael Bloom contributed to this report.
