T2 Biosystems Inc. (NASDAQ:TTOO) Is Getting Burned By Analysts


Biosystems Inc. (NASDAQ: TTOO) recently provided commercial update for its 2Q2016 but as it turned out, there was little to love in the information that the company shared. That has led some analysts on Wall Street to downgrade their rating on the stock. So what did the company say and what is the aftermath of it?

On a positive note, Biosystems Inc. (NASDAQ: TTOO) said it was able to close six commitments during 2Q. Of those commitments, the company said that two are international and four are domestic. The company further said that those commitments involve high profile and prestigious institutions that it fell short of identifying by name.

45 commitments and contracts in 2016

Biosystems Inc. (NASDAQ: TTOO) has set for itself the target of closing 45 commitments and contracts in 2016. As such, the management noted that the progress made in 2Q brought the company closer to hitting its commitments and contracts target.

Invalid test results

But outside of the issue of commitments and contracts, Biosystems reported about problems involving its T2Candida cartridge. Specifically the company said that higher than normal invalid test results were being registered by the cartridge. Due to the issue of alarming invalid tests, Biosystems said that it held shipping of the cartridges starting the last week of June. After halting shipment of the product, the company announced plans to pull some of the inventory from the market and replace them with cartridges manufactured using a different process.

The work of pulling the older T2Candida cartridges from the market and replacing them with better ones is expected to cost nearly $0.75 million.

While the cost issue might not be raising many alarms, it is the fear that the invalid test results issue could delay Biosystems’ other programs, thus keeping investors waiting for the juice to start trickling down.

Downgrade of Biosystems Inc. (NASDAQ: TTOO)’s stock

Perhaps that explains why analyst Karen Koski of BTIG decided to down grade the stock of Biosystems Inc. (NASDAQ: TTOO) to a SELL from a BUY. Koski also cut the price target on TTOO to $4 from $12.


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