CareDx, Inc’s (NASDAQ:CDNA): CareDx, Inc., a transplant diagnostics company, together with its subsidiaries, focuses on the discovery, development, and commercialization of diagnostic solutions for transplant patients worldwide. On 31 December 2018, the US$1.2b market-cap posted a loss of -US$46.8m for its most recent financial year. The most pressing concern for investors is CDNA’s path to profitability – when will it breakeven? In this article, I will touch on the expectations for CDNA’s growth and when analysts expect the company to become profitable.
CDNA is bordering on breakeven, according to the 5 Biotechs analysts. They anticipate the company to incur a final loss in 2019, before generating positive profits of US$8.1m in 2020. CDNA is therefore projected to breakeven around a few months from now. How fast will CDNA have to grow each year in order to reach the breakeven point by 2020? Working backwards from analyst estimates, it turns out that they expect the company to grow 75% year-on-year, on average, which signals high confidence from analysts. If this rate turns out to be too aggressive, CDNA may become profitable much later than analysts predict.
Given this is a high-level overview, I won’t go into details of CDNA’s upcoming projects, though, bear 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. CDNA has managed its capital judiciously, with debt making up 0.4% of equity. This means that CDNA has predominantly funded its operations from equity capital,and its low debt obligation reduces the risk around investing in the loss-making company.
There are too many aspects of CDNA to cover in one brief article, but the key fundamentals for the company can all be found in one place – CDNA’s company page on Simply Wall St. I’ve also put together a list of key factors you should further research:
- Valuation: What is CDNA 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 CDNA 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 CareDx’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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