OncoCyte (OCX), a player in the precision diagnostics market, designed a new diagnostic tool to help treat chronic conditions like organ transplant rejection and cancer. It aims to increase the efficacy of treatments by monitoring organ transplant success and predicting responses to cancer therapies while reducing adverse effects. The stock rose 31% in the past three months, and there is potential for further upside. The company’s recent strategic partnership with Bio-Rad Laboratories (BIO), as well as new product launches, paints a potentially promising picture for the company and investors.
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OncoCyte Expanding Distribution
OncoCyte is a precision diagnostics firm that produces a range of clinical and research tools designed to provide physicians and their patients with better clarity and confidence. Among its offerings are VitaGraft, a clinical blood-based solid organ transplantation monitoring test, and GraftAssure, a research-use-only (RUO) blood-based solid organ transplantation monitoring test.
OncoCyte has also developed DetermaIO, a gene expression test designed to predict responses to immunotherapies, and DetermaCNI, a blood-based tool for monitoring the efficacy of cancer therapies.
In April, the company partnered with Bio-Rad Laboratories to enable the commercialization of GraftAssure in the U.S. and Germany. The collaboration’s main purpose is to take advantage of Bio-Rad’s extensive reach and expertise in life sciences. Notably, Bio-Rad has exclusive global distribution rights beyond these regions, highlighting the partnership’s importance for expanding OncoCyte’s operations and catering to the rising demand for transplant diagnostics.
OncoCyte’s Recent Financial Results
OncoCyte reported a challenging first quarter in 2024, with net revenue of $176,000, missing consensus expectations of $350,000, and marking a 41% decrease compared to Q1 of 2023. The total cost of revenues stood at $274,000, marking a 5% decrease from the same period in the previous year. On the expenditure side, research and development expenses increased slightly by 2%, driven by investment in new developments.
In comparison, sales and marketing expenditures grew by 22%, fueled by efforts related to the launch of GraftAssure. Conversely, administrative expenses decreased by 22%, with savings in stock-based compensation, personnel expenses, and operational costs. Earnings per share (EPS) of -$1.13 fell short of analyst estimates of -$0.67.
A significant note for the quarterly results was the loss from operations of—$9.3 million, which contrasted starkly with an income from operations of $5.9 million in Q1 of 2023. The loss from operations was primarily attributable to a noncash change in the fair value of a contingent consideration.
What Is the Price Target for OCX Stock?
The stock has been range-bound for much of the last year, though it has been trending positively over the past 90 days. It trades toward the middle of its 52-week price range of $2.08 – $4.64 and shows positive price momentum, trading above its 20-day (3.07) and 50-day (2.93) moving average. The stock appears fairly valued with a P/B ratio of 3.73x, in line with the Diagnostics & Research industry average of 3.74x.
The company is thinly followed by Wall Street, though the recent outlook on the stock has been positive. Needham analyst Michael Matson recently reiterated a Buy rating on the shares with a price target of $4.25. He noted the decrease in revenue, primarily due to the sale of a major asset, and the anticipation of product launches indicating potential growth and a strengthening of its market position in the near future.
Based on the most recent analyst recommendation, OncoCyte is rated a moderate buy. The price target for OCX stock is $4.25, representing a possible upside of 31.38% from current levels.
Bottom Line on OncoCyte
With its novel diagnostic tests, OncoCyte aims to enhance treatment efficacy and minimize adverse effects for chronic conditions such as cancers and organ transplant rejection. The company’s upcoming launch of its GraftAssure RUO and VitaGraft Kidney kit tests and its recent alliance with Bio-Rad Laboratories suggests a potential for significant growth. The stock is an attractive option for investors seeking opportunities in the burgeoning medical diagnostics sector.
