Is It Too Late to Join the OncoCyte (OCX) Stock Party? Analyst Weighs In


Investors love healthcare stocks for the lottery ticket-like returns they can offer if a company strikes medical gold. Case in point: Shares of OncoCyte (OCX) are skyrocketing nearly 220% (yes, you read right!) in Tuesday’s trading session, after the diagnostic company announced positive data from a validation study demonstrating the accuracy of its liquid biopsy test, DetermaVu, for lung cancer.

DetermaVu is designed to rule out patients who have a suspicious lung nodule but do not require an immediate biopsy. Fortunately for the company and investors alike, the validation study has demonstrated DetermaVu capable of generating sensitivity of 90%, specificity of 75% and an Area Under the Curve (AUC) of .89. Based on the results, the Company is forging ahead with commercialization efforts, with a launch planned for 2H19.

In reaction, Lake Street analyst Thomas Flaten reiterated a Buy rating on OCX stock, while boosting his price target to $7.00 (from $4.00), which implies about 19% upside from current levels.

Flaten commented, “We believe today’s results provide strong evidence for the ability of the Company to move forward with a commercially viable product, offering a robust diagnostic solution for a critical need in the market and taking advantage of a large market opportunity. We affirm our BUY rating and are raising our price target to $7 to reflect the de-risking that occurred with the positive R&D Validation Study results.”

“Completion of validation studies and commercial availability in 2H19 sets OCX on the rather long path to gaining reimbursement, the critical step in seeing commercial success with DetermaVu. We anticipate it may take up to three years to achieve broad-based reimbursement with Medicare and commercial payers. Critical steps along the way include publication of the R&D Validation Study results (6-18 months), the use of this publication to seed study centers for a clinical utility study, and the execution of a clinical utility study, the key variable in supporting reimbursed status. In the intervening period, we do expect the Company to generate revenues, however true commercial success will come with broad-based reimbursement,” the analyst added.

 

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