We feel now is a pretty good time to analyse CareDx, Inc's (NASDAQ:CDNA) business as it appears the company may be on the cusp of a considerable accomplishment. CareDx, Inc. discovers, develops, and commercializes diagnostic solutions for transplant patients and caregivers worldwide. The US$3.3b market-cap company announced a latest loss of US$19m on 31 December 2020 for its most recent financial year result. The most pressing concern for investors is CareDx's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.
According to the 6 industry analysts covering CareDx, the consensus is that breakeven is near. They expect the company to post a final loss in 2021, before turning a profit of US$2.5m in 2022. Therefore, the company is expected to breakeven just over a year from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 84% is expected, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
We're not going to go through company-specific developments for CareDx given that this is a high-level summary, but, take into account that generally biotechs, depending on the stage of product development, have irregular periods of cash flow. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.
Before we wrap up, there’s one aspect worth mentioning. CareDx currently has no debt on its balance sheet, which is rare for a loss-making biotech, which typically has high debt relative to its equity. This means that the company has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.
There are key fundamentals of CareDx which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at CareDx, take a look at CareDx's company page on Simply Wall St. We've also compiled a list of essential aspects you should further examine:
- Valuation: What is CareDx 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 CareDx 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 background.
- 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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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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