Veracyte, Inc.’s (NASDAQ:VCYT): Veracyte, Inc. operates as a genomic diagnostics company in the United States and internationally. With the latest financial year loss of -US$23.0m and a trailing-twelve month of -US$8.2m, the US$1.3b market-cap alleviates its loss by moving closer towards its target of breakeven. As path to profitability is the topic on VCYT’s investors mind, I’ve decided to gauge market sentiment. I’ve put together a brief outline of industry analyst expectations for VCYT, its year of breakeven and its implied growth rate.
According to the 6 industry analysts covering VCYT, the consensus is breakeven is near. They expect the company to post a final loss in 2020, before turning a profit of US$1.0m in 2021. VCYT is therefore projected to breakeven around a few months from now. In order to meet this breakeven date, I calculated the rate at which VCYT must grow year-on-year. It turns out an average annual growth rate of 69% is expected, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.
I’m not going to go through company-specific developments for VCYT given that this is a high-level summary, though, keep in mind that generally a biotech has lumpy cash flows which are contingent on the product type and stage of development the company is in. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.
Before I wrap up, there’s one aspect worth mentioning. VCYT has managed its capital judiciously, with debt making up 0.3% of equity. This means that VCYT has predominantly funded its operations from equity capital,and its low debt obligation reduces the risk around investing in the loss-making company.
This article is not intended to be a comprehensive analysis on VCYT, so if you are interested in understanding the company at a deeper level, take a look at VCYT’s company page on Simply Wall St. I’ve also put together a list of key aspects you should further research:
- Valuation: What is VCYT worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether VCYT is currently mispriced by the market.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Veracyte’s board and the CEO’s back ground.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
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