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Here's Why VCYT Stock Could be a Great Addition to Your Portfolio Now
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Veracyte’s (VCYT - Free Report) progress with the three long-term growth drivers exhibits robust growth potential for the upcoming quarters. The record volume growth of the Decipher Prostrate test instills optimism, supported by the distinct recognition from the NCCN (National Comprehensive Cancer Network). The Afirma GRID offering can help the company extend its reach into the endocrinology market. Meanwhile, declining biopharma revenues and macroeconomic issues are worries for Veracyte.
In the past year, this Zacks Rank #1 (Strong Buy) stock has outperformed both the industry and the S&P 500. Shares have rallied 13% compared with the 12.8% growth of the industry and a 19.9% rise in the S&P 500 composite.
The renowned diagnostics company has a market capitalization of $2.19 billion. The company’s earnings are likely to surge 112.8% in 2024 compared with the 12.9% of the industry. In the trailing four quarters, VCYT delivered an average earnings surprise of 328.4%.
Tailwinds for VCYT Stock
Long-Term Growth Drivers: Veracyte’s successful approach involves identifying medical needs, developing tests, securing clinical evidence, reimbursement and guideline inclusion to drive market penetration. This has effectively led it to invest in long-term growth drivers, such as tackling new cancer challenges with the Percepta Nasal Swab test. The company significantly invests in clinical validation studies to secure reimbursement from payers for the test before it is made available.
To deliver IVD (in-vitro diagnostics) versions of its tests outside the United States, VCYT entered into a multi-year deal with Illumina to develop and offer some of its molecular tests as decentralized IVD tests on NextSeq 550Dx NGS (next-generation sequencing) instrument, using large installed base and lower costs per test. The transition of test manufacturing operations from NanoString to the Marseille, France, facility has provided the company with greater control of its IVD test supply chain. The company bolstered its efforts to serve patients further along the care continuum with the acquisition of C2i Genomics in February 2024.
Strength of the Decipher Franchise: In the second quarter of 2024, the Decipher Prostate cancer tests achieved a new volume record of 19,900 tests, with growth recorded for both new and existing providers. In the updated NCCN’s Guidelines published in February 2024, the Decipher test received a “Level 1B” evidence designation for prostate cancer, distinguishing it as the only gene-expression test to do so.
Image Source: Zacks Investment Research
On the reimbursement front, Veracyte signed a contract with a major commercial payer to make Decipher Prostate an in-network offering bridge to nearly 30 million members. The company is developing and validating the Decipher offering for patients with advanced-stage, metastatic and castrate-resistant prostate cancer. It has engaged with Medicare's Molecular Diagnostic Services Program (MolDX) program on their draft coverage policy, or LCD, to enable Decipher testing of this patient population, which may become final later this year or early 2025.
Afirma Continues to Outperform: Veracyte is gaining market share for the Afirma test as more people become aware of the compelling evidence supporting its quality and performance. The company is hopeful about its research-use-only Afirma GRID offering, which is expected to help Veracyte to expand in the endocrinology market.
In June, the MolDX finalized an expanded local coverage determination for Afirma, adding reimbursement for Medicare and Medicare Advantage patients with Bethesda 5 thyroid nodules, or for those who suspect cancer. The company is optimistic about this advancement, considering that there are up to 30,000 patients with nodules classified as Bethesda 5 annually, of which approximately one-third will be covered under Medicare and Medicare Advantage.
Concerns Weighing on VCYT Stock
Biopharma Headwinds Persist: Veracyte is experiencing a decline in biopharma and other services revenues as a result of reductions in customer projects, extended sales cycles and overall spending constraints across the industry. During the second quarter, the company reported a 4% decline in Biopharmaceutical and other segment gross margins due to lower fixed cost absorption.
Macro Issues Hurt Growth: Veracyte’s operations are susceptible to macroeconomic challenges, such as ongoing interest rate increases, inflation in the United States and global markets, as well as turmoil in the global banking and finance system. The ongoing geopolitical uncertainties and supply disruption can potentially disrupt the company’s profit margin.
VCYT’s Estimate Trend
In the past 30 days, the Zacks Consensus Estimate for Veracyte has improved from a loss of 5 cents to earnings of 13 cents per share.
The Zacks Consensus Estimate for the company’s 2024 revenues is pegged at $437 million. This suggests a 21% rise from the year-ago reported number.
TransMedix Group’s earnings are expected to surge 257.1% in 2024. Its shares have soared 135% compared with the industry’s 12.7% rise in the past year.
TMDX’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 287.5%.
AxoGen has an estimated 2024 earnings growth rate of 94.1% compared with the industry’s 12.9%. Shares of the company have soared 123.7% compared with the industry’s 12.7% rise over the past year.
AXGN’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 96.5%.
Boston Scientific has an estimated earnings growth rate of 17.1% compared with the industry’s 14.8%. Shares of the company have rallied 49.5% compared with the industry’s 15.5% rise over the past year.
BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 7.2%.
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Here's Why VCYT Stock Could be a Great Addition to Your Portfolio Now
Veracyte’s (VCYT - Free Report) progress with the three long-term growth drivers exhibits robust growth potential for the upcoming quarters. The record volume growth of the Decipher Prostrate test instills optimism, supported by the distinct recognition from the NCCN (National Comprehensive Cancer Network). The Afirma GRID offering can help the company extend its reach into the endocrinology market. Meanwhile, declining biopharma revenues and macroeconomic issues are worries for Veracyte.
In the past year, this Zacks Rank #1 (Strong Buy) stock has outperformed both the industry and the S&P 500. Shares have rallied 13% compared with the 12.8% growth of the industry and a 19.9% rise in the S&P 500 composite.
The renowned diagnostics company has a market capitalization of $2.19 billion. The company’s earnings are likely to surge 112.8% in 2024 compared with the 12.9% of the industry. In the trailing four quarters, VCYT delivered an average earnings surprise of 328.4%.
Tailwinds for VCYT Stock
Long-Term Growth Drivers: Veracyte’s successful approach involves identifying medical needs, developing tests, securing clinical evidence, reimbursement and guideline inclusion to drive market penetration. This has effectively led it to invest in long-term growth drivers, such as tackling new cancer challenges with the Percepta Nasal Swab test. The company significantly invests in clinical validation studies to secure reimbursement from payers for the test before it is made available.
To deliver IVD (in-vitro diagnostics) versions of its tests outside the United States, VCYT entered into a multi-year deal with Illumina to develop and offer some of its molecular tests as decentralized IVD tests on NextSeq 550Dx NGS (next-generation sequencing) instrument, using large installed base and lower costs per test. The transition of test manufacturing operations from NanoString to the Marseille, France, facility has provided the company with greater control of its IVD test supply chain. The company bolstered its efforts to serve patients further along the care continuum with the acquisition of C2i Genomics in February 2024.
Strength of the Decipher Franchise: In the second quarter of 2024, the Decipher Prostate cancer tests achieved a new volume record of 19,900 tests, with growth recorded for both new and existing providers. In the updated NCCN’s Guidelines published in February 2024, the Decipher test received a “Level 1B” evidence designation for prostate cancer, distinguishing it as the only gene-expression test to do so.
Image Source: Zacks Investment Research
On the reimbursement front, Veracyte signed a contract with a major commercial payer to make Decipher Prostate an in-network offering bridge to nearly 30 million members. The company is developing and validating the Decipher offering for patients with advanced-stage, metastatic and castrate-resistant prostate cancer. It has engaged with Medicare's Molecular Diagnostic Services Program (MolDX) program on their draft coverage policy, or LCD, to enable Decipher testing of this patient population, which may become final later this year or early 2025.
Afirma Continues to Outperform: Veracyte is gaining market share for the Afirma test as more people become aware of the compelling evidence supporting its quality and performance. The company is hopeful about its research-use-only Afirma GRID offering, which is expected to help Veracyte to expand in the endocrinology market.
In June, the MolDX finalized an expanded local coverage determination for Afirma, adding reimbursement for Medicare and Medicare Advantage patients with Bethesda 5 thyroid nodules, or for those who suspect cancer. The company is optimistic about this advancement, considering that there are up to 30,000 patients with nodules classified as Bethesda 5 annually, of which approximately one-third will be covered under Medicare and Medicare Advantage.
Concerns Weighing on VCYT Stock
Biopharma Headwinds Persist: Veracyte is experiencing a decline in biopharma and other services revenues as a result of reductions in customer projects, extended sales cycles and overall spending constraints across the industry. During the second quarter, the company reported a 4% decline in Biopharmaceutical and other segment gross margins due to lower fixed cost absorption.
Macro Issues Hurt Growth: Veracyte’s operations are susceptible to macroeconomic challenges, such as ongoing interest rate increases, inflation in the United States and global markets, as well as turmoil in the global banking and finance system. The ongoing geopolitical uncertainties and supply disruption can potentially disrupt the company’s profit margin.
VCYT’s Estimate Trend
In the past 30 days, the Zacks Consensus Estimate for Veracyte has improved from a loss of 5 cents to earnings of 13 cents per share.
The Zacks Consensus Estimate for the company’s 2024 revenues is pegged at $437 million. This suggests a 21% rise from the year-ago reported number.
Other Top MedTech Stocks
Some other top-ranked stocks in the broader medical space are TransMedix Group (TMDX - Free Report) , AxoGen (AXGN - Free Report) and Boston Scientific (BSX - Free Report) . While TransMedix Group currently sports a Zacks Rank #1, AxoGen and Boston Scientific carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
TransMedix Group’s earnings are expected to surge 257.1% in 2024. Its shares have soared 135% compared with the industry’s 12.7% rise in the past year.
TMDX’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 287.5%.
AxoGen has an estimated 2024 earnings growth rate of 94.1% compared with the industry’s 12.9%. Shares of the company have soared 123.7% compared with the industry’s 12.7% rise over the past year.
AXGN’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 96.5%.
Boston Scientific has an estimated earnings growth rate of 17.1% compared with the industry’s 14.8%. Shares of the company have rallied 49.5% compared with the industry’s 15.5% rise over the past year.
BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 7.2%.