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.
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.
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.
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:
- 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.
- 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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