Seer’s Revenue to Grow Over 120% 5-Year CAGR Through 2026: Morgan Stanley

Morgan Stanley set their stock price forecast on the Redwood City-based biotechnology company Seer at $65, assigning an “Equal-weight” rating and said revenue would grow more than 120% 5-year CAGR as use cases grow and consumable revenue growth begins to outpace instrument revenue growth.

Seer’s stock is up over 200% since it began trading on the Nasdaq Global Select Market on December 4, 2020. It exceeded its pre-IPO targets in the offering and sold just over 9 million shares, instead of previously expected 8.8 million. Its IPO price of $19 was also higher than the previously anticipated range of $16-$18.

“We forecast instrument revenue growing at 73% CAGR (compounded annual growth rate) over 2021-26, with the installed base increasing from 20 instruments in 2021 to 670 instruments in 2026. We forecast consumables to grow at a >185% CAGR to >$150M in 2026, driven by the growing installed base and an expanding set of use cases, with annualized pull through per instrument increasing from $135K in 2021 to $300K in 2026,” noted Tejas Savant, equity analyst at Morgan Stanley.

“As revenue mix shifts towards consumables, we expect GMs to expand from 32% in 2021 to 72% in 2026. Moving down the P&L, we see Seer’s tunable technology (new products take the form of new nanoparticle panels with software updates, that leverage the same automation instrument) lending itself to rapid idea-to-product turnaround timelines, rapid manufacturing cycles and SG&A leverage, and forecast profit breakeven in the late 2026 timeframe.”

Morgan Stanley gave a target price of $105 under a bull-case scenario and $25 under the worst-case scenario for Seer, whose technology helps scientists understand how proteins work in diseases. Other equity analysts have also recently started coverage of the stock. JP Morgan initiated coverage with an overweight rating and set the target price at $75.

The world’s seventh-largest bank by total assets said the life sciences company is an industry pioneer in proteomic analysis with a unique and disruptive technology that enables unbiased, deep, rapid, large-scale proteomics to accelerate biological insights. JP Morgan forecasts the firm’s revenue CAGR to be over 191% over 2020-25 and more than 45% over 2025-30, representing the best growth profile within the brokerage’s coverage.

“By enabling rapid, unbiased assessment of the proteome at scale, Seer’s unique platform holds transformative potential in the life sciences in both the research & clinical settings. With the stock up >200% post IPO, we view progress toward commercialization as key to unlocking further upside,” Morgan Stanley’s Savant added.

“We acknowledge the transformative potential of Seer’s proprietary nanoparticle platform, clear superiority (especially in terms of throughput and scalability) over unbiased proteomics approaches in use today, and a capable management team with a demonstrable track record of execution at the helm, in addition to the large (and growing) TAM that it could address. However, following a significant upward move in share price following its IPO, we recognize that investors are pricing in strong execution and view measurable progress towards successful commercialization as key to unlocking further upside vs. current levels.”