When Can We Expect A Profit From Veracyte, Inc. (NASDAQ:VCYT)?

Veracyte, Inc.’s (NASDAQ:VCYT): Veracyte, Inc. operates as a genomic diagnostics company in the United States and internationally. On 31 December 2018, the US$883m market-cap posted a loss of -US$23.0m for its most recent financial year. As path to profitability is the topic on VCYT’s investors mind, I’ve decided to gauge market sentiment. Below I will provide a high-level summary of the industry analysts’ expectations for VCYT.

View our latest analysis for Veracyte

According to the 3 industry analysts covering VCYT, the consensus is breakeven is near. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$5.8m in 2021. So, VCYT is predicted to breakeven approximately 2 years 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 55% is expected, which signals high confidence from analysts. If this rate turns out to be too aggressive, VCYT may become profitable much later than analysts predict.

NasdaqGM:VCYT Past and Future Earnings, February 27th 2019
NasdaqGM:VCYT Past and Future Earnings, February 27th 2019

Given this is a high-level overview, I won’t go into details of VCYT’s upcoming projects, however, bear in mind that by and large 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 32% 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.

Next Steps:

There are key fundamentals of VCYT which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at VCYT, take a look at VCYT’s company page on Simply Wall St. I’ve also compiled a list of pertinent factors you should further examine:

  1. Historical Track Record: What has VCYT’s performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
  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 back ground.
  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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.