Last Update 15 Dec 25

Fair value Increased 2.59%

VCYT: Updated NCCN Guidelines Will Support Gradual Risk Stratification Adoption

Analysts have modestly raised their price target on Veracyte to approximately $47.50 from about $46.30, citing slightly stronger long term growth and profitability expectations, as well as the incremental boost from updated NCCN guidelines that further differentiate the company’s Decipher prostate cancer test.

Analyst Commentary

Street research characterizes the NCCN guideline update as a net positive for Veracyte, with the Decipher prostate cancer test receiving prominent placement in risk stratification tables across multiple disease stages. This visibility is seen as reinforcing the test’s clinical relevance and supporting the company’s long term growth narrative.

Bullish Takeaways

Bullish analysts argue that Decipher’s exclusive listing for certain high risk and post radical prostatectomy settings strengthens its competitive moat, supporting premium pricing and durable revenue growth.
The expanded presence in NCCN risk stratification tables is viewed as a catalyst for broader physician adoption, which could accelerate test volume growth and drive operating leverage over the next several years.
Analysts highlight that inclusion across multiple risk categories underscores the robustness of Decipher’s clinical evidence base, reducing reimbursement risk and improving visibility into long term cash flow.
Some see the guideline changes as validating Veracyte’s investment in oncology diagnostics, bolstering confidence in management’s ability to execute on its pipeline and justify a higher growth multiple.

Bearish Takeaways

Bearish analysts caution that while guideline inclusion is supportive, the magnitude of near term volume and revenue uplift may be modest, limiting the immediate impact on valuation.
There is concern that competitive pressure from other precision oncology tests and emerging technologies could intensify over time, potentially constraining Veracyte’s pricing power despite current differentiation.
Some worry that investor expectations for sustained high growth are rising faster than the company’s demonstrated execution, increasing the risk of multiple compression if uptake trends or margins fall short.
Analysts also note that broader macro and reimbursement uncertainties could dampen the full benefit of the NCCN update, particularly if payers move slowly to adjust coverage and utilization policies.

What's in the News

Raised 2025 total revenue guidance to a range of $506 million to $510 million, implying approximately 14% year over year growth, up from prior guidance of $496 million to $504 million (company guidance).
Published two new studies using the Afirma GRID research platform, showing potential for mRNA based signatures to better predict low and high risk thyroid tumors before surgery (Frontiers in Endocrinology and Surgery).
Reported BALANCE trial data indicating the PAM50 molecular signature can identify which men with recurrent prostate cancer benefit from adding apalutamide to salvage radiation therapy, with substantial reduction in biochemical failure for luminal B tumors (ASTRO 2025 presentation).
Highlighted nine Decipher focused abstracts at ASTRO 2025, including the first prospective validation data for a hormone therapy benefit signature in recurrent prostate cancer, reinforcing the depth of evidence behind the Decipher Prostate test (ASTRO 2025 conference program).

Valuation Changes

The fair value estimate has risen slightly to approximately $47.50 from about $46.30, reflecting modestly higher long-term cash flow expectations.
The discount rate has edged up marginally to roughly 7.06 percent from about 7.05 percent, implying a slightly higher required return to compensate for perceived risk.
The revenue growth assumption has increased modestly to about 11.45 percent from roughly 11.45 percent previously, signaling a very small upward revision in long-term top-line expectations.
The net profit margin has ticked up fractionally to around 17.17 percent from about 17.16 percent, indicating a minimal improvement in projected long-term profitability.
The future P/E multiple has risen slightly to approximately 40.6 times from about 39.6 times, suggesting a modest expansion in the valuation investors are expected to pay for forward earnings.

Expanding cancer diagnostics portfolio and clinical evidence are driving greater physician adoption, market penetration, and long-term top-line growth.
Operational efficiencies, AI integration, and strategic partnerships are enhancing technology differentiation, profitability, and competitive advantage.
Heavy dependence on core products and payer coverage, combined with industry shifts and mounting regulatory and reimbursement pressures, threatens Veracyte's growth, margins, and competitive positioning.

Catalysts

About Veracyte

Operates as a diagnostics company in the United States and internationally.What are the underlying business or industry changes driving this perspective?

Broad and accelerating adoption of advanced genomic and noninvasive cancer diagnostics, combined with growing cancer incidence and aging populations, are steadily expanding the potential patient pool-directly supporting sustained double-digit volume and revenue growth across Veracyte's core product lines (notably Decipher and Afirma).
Pipeline momentum-with five major product launches and a pivotal clinical study (OPTIMA) completing in the next 18 months-positions Veracyte to further diversify revenue, drive cross-selling, penetrate new markets (e.g., MRD in bladder cancer, Prosigna for breast cancer), and significantly expand addressable markets, supporting long-term topline acceleration.
Continued market penetration and share gains for Decipher Prostate, including expansion into metastatic and high-risk segments (now covering the entire prostate cancer spectrum), are fueling outsized growth; robust clinical evidence and guideline inclusions are likely to drive further physician adoption and payer coverage, bolstering both revenues and earnings visibility.
Investments in automation, next-generation sequencing platforms (e.g., NovaSeq X), and data analytics, combined with strategic restructuring (SAS sale), are driving operational efficiencies and lower cost of goods-translating into improving gross margins and higher long-term profitability.
Increasing clinical evidence, integration of AI/digital pathology, partnerships (Helix, biopharma), and a growing GRID/data platform are enhancing Veracyte's technology differentiation and providing leverage to value-based healthcare models; this strengthens the reimbursement outlook and competitive edge, supporting higher sustainable margins and earnings growth as volumes scale.

Veracyte Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Veracyte's revenue will grow by 9.5% annually over the next 3 years.
Analysts assume that profit margins will increase from 5.5% today to 19.4% in 3 years time.
Analysts expect earnings to reach $121.9 million (and earnings per share of $1.37) by about September 2028, up from $26.3 million today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as $41.7 million.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 32.6x on those 2028 earnings, down from 91.5x today. This future PE is greater than the current PE for the US Biotechs industry at 15.5x.
Analysts expect the number of shares outstanding to grow by 1.51% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 6.78%, as per the Simply Wall St company report.

Veracyte Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Heavy reliance on a limited number of core products-specifically Decipher and Afirma-exposes Veracyte to significant revenue concentration risk; any competitive disruption, reimbursement challenge, or technological obsolescence in these segments could materially impact overall revenue and earnings.
The long-term success of Veracyte's new product launches (e.g., Prosigna in the US, MRD platform) depends heavily on securing payer coverage, inclusion in key guidelines, and demonstrating sufficient clinical utility; delays or unfavorable outcomes in these areas could result in lower-than-expected revenue growth and margin pressure.
Increasing adoption of digital pathology and AI-driven analysis in diagnostics risks shifting competitive advantages toward larger, resource-rich companies or disruptors, potentially making it harder for Veracyte to maintain market share and superior margins.
Ongoing pricing and reimbursement pressures from laboratory benefit managers (LBMs), insurers, and healthcare systems-either through rate reductions, policy changes, or increased demands for clinical evidence-could put downward pressure on Veracyte's average selling prices (ASPs) and thus compress gross margins and future earnings.
Escalating regulatory scrutiny, especially related to diagnostics approvals, clinical evidence requirements, or European market IVDR (In Vitro Diagnostic Regulation) hurdles, may slow international rollout, increase compliance costs, and delay or reduce anticipated revenue expansion from geographic diversification.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $39.75 for Veracyte based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $45.0, and the most bearish reporting a price target of just $28.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $629.2 million, earnings will come to $121.9 million, and it would be trading on a PE ratio of 32.6x, assuming you use a discount rate of 6.8%.
Given the current share price of $30.62, the analyst price target of $39.75 is 23.0% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

VCYT: Continued Pipeline Success Will Drive Broader Health Market Expansion