Veracyte, Inc. (NASDAQ:VCYT) Is About To Turn The Corner

With the business potentially at an important milestone, we thought we'd take a closer look at Veracyte, Inc.'s (NASDAQ:VCYT) future prospects. Veracyte, Inc. operates as a diagnostics company in the United States and internationally. The US$2.8b market-cap company’s loss lessened since it announced a US$74m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$9.3m, as it approaches breakeven. As path to profitability is the topic on Veracyte's investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.

View our latest analysis for Veracyte

According to the 10 industry analysts covering Veracyte, the consensus is that breakeven is near. They expect the company to post a final loss in 2023, before turning a profit of US$28m in 2024. The company is therefore projected to breakeven around 12 months from now or less. How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2024? Working backwards from analyst estimates, it turns out that they expect the company to grow 46% year-on-year, on average, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Given this is a high-level overview, we won’t go into details of Veracyte's upcoming projects, however, take into account that by and large 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.

One thing we’d like to point out is that Veracyte 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.

Next Steps:

There are too many aspects of Veracyte to cover in one brief article, but the key fundamentals for the company can all be found in one place – Veracyte's company page on Simply Wall St. We've also compiled a list of essential aspects you should further examine:

1. Valuation: What is Veracyte 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 Veracyte is currently mispriced by the market.
2. 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 background.
3. 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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.