In a report released yesterday, Sung Ji Nam from BTIG maintained a Buy rating on Veracyte (NASDAQ: VCYT), with a price target of $13. The company’s shares closed yesterday at $5.93, close to its 52-week low of $5.23.
Ji Nam wrote:
“Afirma Acceleration and Percepta Gaining Traction Reiterate Buy and $13 PT: 1Q18 revenues (+22% y/y) were meaningfully ahead of consensus, and full year guidance was raised (from 13-15% growth to 15-20% growth or 20-24% growth of accrued revenue) reflecting higher genomic test volume outlook (15-20% growth vs. 15% growth previously). While we had anticipated revenue acceleration throughout 2018, after a transitional year in 2017, we are incrementally more encouraged by VCYT’s strong performance out of the gate, particularly with its genomic test volume growth of +18% y/y (including +14% growth for Afirma), in-network contract with Anthem (Afirma contracting now essentially completed), and the doubling of institutions ordering Percepta since 4Q17. Key catalysts over the next 12 to 18 months include expanded commercial payer coverage for Percepta, and Medicare coverage for Envisia (before year-end; early access program initiated). Given what we view as one of the most compelling product portfolios in the diagnostic industry (>$1.5 billion TAM; limited or no competition thus far), we continue to believe VCYT is a strong double- digit top-line growth story longer-term. With shares trading at ~2x 2019E sales, we see significant upside to valuation, particularly if VCYT continues to execute against near-term growth targets. Model update: Our updated 2018 revenue and GAAP EPS estimates are $84.5mm, +17% y/y (vs. $82mm, +13% prior), and -$1.06 (vs. -$0.81 prior; largely reflecting higher than previously forecasted S&M expense, as VCYT expands its sales force from 65 reps at the end of 2017 to 85 by 2018-end). Our updated 2019 revenue and GAAP EPS estimates are $100mm, +18% y/y (unchanged), and -$0.91 (vs. -$0.62 prior).”
According to TipRanks.com, Nam is a 1-star analyst with an average return of -1.3% and a 61.6% success rate. Nam covers the Healthcare sector, focusing on stocks such as Oxford Immunotec, Myriad Genetics, and Thermo Fisher.
Veracyte has an analyst consensus of Moderate Buy, with a price target consensus of $8.95.
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The company has a one-year high of $9.80 and a one-year low of $5.23. Currently, Veracyte has an average volume of 108.4K.
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Veracyte, Inc. engages in the research, development, and commercialization of diagnostic products. Its portfolio includes Afirma, Percepta, and Envisia. It intends to treat thyroid cancer, improve lung cancer screening, and clarify the diagnosis of idiopathic pulmonary fibrosis. The company was founded by Bonnie H. Anderson and Y.
