BTIG Defending GeneDx (WGS)

BTIG analyst Mark Massaro reiterated a Buy rating and $95.00 price target on GeneDx (NASDAQ: WGS)

The analyst comments "Earlier today, a short report was published on WGS which alleges wholesale reimbursement fraud at the company. Shares are down ~4%, and we believe the move is relatively contained because of the lack of substance in the claims. We had a chance to read the report and to speak to management of GeneDx today. In our opinion, the report contains a number of inaccuracies, and we are reiterating our estimates on GeneDx and Buy rating with $95 PT. We were particularly puzzled by some of the statements about the old legacy company, Sema4, given that it was already shut down. Below we highlight our thesis and latest thoughts on the company. We are hosting (virtual) meetings with WGS management at the BTIG Snowbird Conference next week. Why we like GeneDx. We regard GeneDx as the dominant market leader in rare disease and whole exome testing, and we believe the company is well positioned to increase its penetration into the market for many years to come. GeneDx does not engage in code stacking. Management has confirmed this and stated that the company bills out CPT codes for genome and exome testing, which is the core of the business - CPT codes 81415 and 81416 for exomes, and 81425 and 81426 for genomes, based on our understanding. Let's stay focused on the new company, GeneDx. After GeneDx's team took the combined company over, they shut down the Sema4 business and inked a settlement agreement with UnitedHealthcare (UNH, Not Rated). To us, this is a well-known, well-covered, and well-understood topic. GeneDx does not perform any legacy Sema4 testing today. About Centrellis. We agree with the investors who believed Centrellis was not a good business, and we were supportive of the decision to shut it down. It was created by the old Sema4 team and did not live up to its billing. About employee morale. In our discussions with GeneDx employees, we have found that moral is actually quite good. Yes, GeneDx parted ways with almost all of the old Sema4 team (except for 6 people of ~1,000), but that is often expected when exiting a business. Again, this was a well-known and well-covered dynamic. After a 2,500% gain in 2024, it's natural to get some attention - positive and negative. In our opinion, the run was justified. The company crossed over to positive Adj. net income last year, which was a remarkable turnaround. We appreciate that there were issues with the legacy company, and we agreed with the decision to end that business. We reiterate our Buy rating on the stock and $95 PT and would view weakness in the shares created by the commentary within the negative report as a buying opportunity."

For an analyst ratings summary and ratings history on GeneDx click here. For more ratings news on GeneDx click here.

Shares of GeneDx closed at $72.02 yesterday.

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