What Can Investors Learn from Invitae’s Newly Added Risk Factors?

Invitae (NVTA) is an American medical genetics testing company. The company is leveraging its acquisitions to enhance its offerings.

Let’s take a look at Invitae’s latest financial performance, corporate developments, and risk factors.

Invitae’s Q2 Financial Results and 2021 Guidance

Revenue increased 152% year-over-year to $116.3 million in the second quarter, exceeding consensus estimates of $108.3 million. Invitae posted an adjusted loss per share of $0.85. That marked an improvement from a loss per share of $0.97 in the same quarter last year but missed consensus estimates of a loss per share of $0.65. Invitae ended Q2 with $1.54 billion in cash. (See Invitae stock charts on TipRanks).

For full-year 2021, Invitae anticipates revenue in the range of $475 million – $500 million.

Invitae’s Corporate Developments

Invitae has entered into an agreement to acquire Ciitizen, a consumer health records platform. The deal values Ciitizen at $325 million, and Invitae plans to pay for the purchase with a mix of cash and stock. The cash component of the deal is $125 million. The transaction is expected to close in September 2021.

During Q2, Invitae acquired Medneon, a provider of artificial intelligence-powered risk assessment tools. Invitae says that Medneon will enable it to make it easier for doctors to determine who should be tested. It will also empower doctors to individualize treatment based on genetic information.

Invitae signed 43 biopharma partnership deals in Q2. Those deals include the launch of a new sponsored program in the U.S., Canada, Brazil, and Australia. The program will involve providing free genetic testing to people at risk of common neurodegenerative conditions such as Alzheimer’s disease and Parkinson’s disease.

Invitae’s Risk Factors

The new TipRanks Risk Factors tool reveals 53 risk factors for Invitae. Since December 2020, the company has updated its risk profile with two new risk factors under the Legal and Regulatory, and Production categories.

The company tells investors that in May 2022, the European Union will shift to a new regulatory system for the approval of in-vitro diagnostic devices. It sees challenges in the regulatory transition and warns that it may be unable to sell its existing tests in Europe.

Invitae also tells investors that portions of its testing services are offered at contracted third-party laboratories. However, it does not have full control of the laboratories in areas like capacity and quality. It cautions that it may be unable to offer the tests if problems arise at the contracted laboratories.

The majority of Invitae’s risk factors fall under the Finance and Corporate category, which accounts for 32% of the total risks. That is above the sector average at 29%. Invitae’s shares have declined about 24% since the beginning of 2021.

Analysts’ Take

Following Invitae’s Q2 report and 2021 guidance, Benchmark Co. analyst Bruce Jackson upgraded Invitae stock to a Buy from a Hold with a price target of $35. Jackson’s new price target suggests 10.38% upside potential.

Consensus among analysts is a Moderate Buy based on 3 Buys and 2 Holds. The average Invitae price target of $36.67 implies 15.64% upside potential to current levels.