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William Blair & Company Initiates Coverage of Genoptix, Inc. With Market Perform Rating

^{Published on 2008-11-25 10:23:06 - Market Wire}
 

CHICAGO--([ BUSINESS WIRE ])--William Blair & Company initiated research coverage of Genoptix, Inc. (Nasdaq:GXDX) ($29.51), a specialty lab focused on the hematopathology (diagnosis of blood-based diseases) market, with a Market Perform rating and an Aggressive Growth company profile.

Associate Analyst Amanda Murphy estimated that the company would generate earnings of $1.32 per share in 2008 and $1.13 per share in 2009.

"Genoptix has successfully capitalized on the opportunity to offer a more comprehensive diagnostic approach to community-based hematologists/oncologists through its COMPASS and CHART offerings," Murphy said. "The company has realized significant success with this strategy, reporting compound annual volume growth of 184% since the beginning of 2005. Half of its total cases are now associated with the COMPASS/CHART product—this number jumps to 90% for bone marrow cases alone—which speaks to the appeal of its holistic approach, in our view."

Murphy continued, "Hematopathology testing in the United States has become a large and highly specialized market, representing a $1.1 billion to $1.5 billion opportunity, according to our estimates. Moreover, given the demographic shift, improved patient outcomes, and continued innovation, we expect the market will grow at an underlying rate of 8% to 10% over the next three to five years. That said, we believe Genoptix could face normalizing volume growth (driven by increased competition, reimbursement pressure, and resource constraints) over the next one to two years; we view 25% as a more sustainable long-term earnings growth estimate for the company versus our estimate of 50% fully taxed EPS growth in 2008. Consequently, although we believe Genoptix operates in an attractive market, we view valuation compression as a key risk for the stock."

William Blair & Company, L.L.C. intends to seek or expects to receive compensation for investment banking services from this company in the next 3 months.

William Blair & Company, L.L.C. is a market maker in the security of this company and may have a long or short position.

For important disclosures and information regarding the firm's rating system, valuation methods and potential conflicts of interest, please visit:[ http://www.williamblair.com/Pages/news_story_dept.asp?uid=1451&depID=4 ]

Additional information is available upon request.