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NeoGenomics (NEO) Stock Plunges as CEO Abruptly Resigns and Co. Warns for Q1, Prompting Two Street Downgrades

Published 30/03/2022, 12:46 am
Updated 30/03/2022, 12:46 am
© Reuters.

NeoGenomics (NASDAQ:NEO) shares have collapsed 29% in pre-open trading Tuesday after announcing that CEO Mark Mallon will be stepping down from the top role and the board. In addition, the company said it now sees first-quarter revenue below the low end of its prior guidance of $118 - $120 million and EBITDA for the quarter below the low end of its previous guidance of $(15) - $(12) million. The larger loss was driven by higher than anticipated Clinical Services cost of goods sold. NeoGenomics also withdrew its 2022 annual financial guidance.

While the company said the CEO's departure was mutually agreed upon and not due to any disagreements, inappropriate action, or violation, the news took Wall Street by surprise. Two Wall Street analysts downgraded the shares following the announcement.

Stephens analyst Mason Carrico downgrades shares to Equal-weight from Overweight on "increased near-term uncertainty" following the CEO news, headwinds in the base business, and depressed margins. Carrico said while he may be downgrading shares near a bottom, he expects the stock to "languish" over the next year. He cut his price target to $16 from $34.

BofA Securities analyst Derik de Bruin cut shares to Hold from Buy with a new price target of $18 following the news. The analyst lowered FY22/23 revenue forecasts while increasing their net loss per share assumptions. After speaking with management, they indicated some incremental COVID-19 headwinds in the first quarter, and test volumes have not bounced back. Management is unsure why but sees this as more of a NEO-specific issue than an industry-wide one.

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