Veracyte (VCYT) AI Stock Analysis

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Veracyte

(NASDAQ:VCYT)

61Neutral

Veracyte's strong financial performance and promising earnings guidance are offset by technical indicators suggesting short-term weakness and a high valuation. While revenue growth and strategic initiatives are positive, high P/E and operational challenges present risks. The overall score reflects these mixed factors.

Positive Factors

Market Share and Adoption

Decipher has over 65% market share and has driven clinician awareness and adoption with orders increasing across both new and existing accounts.

Revenue Guidance

Core testing revenue guidance came in 3% ($13 million) ahead of consensus and AEBITDA margin guidance was 150 basis points above expectations.

Testing Revenue

The testing business showed continued strength, with Testing revenue growing 24% year-over-year, driven by a 44% increase in Decipher revenue.

Negative Factors

Commercial Product Concerns

Concern exists that Veracyte has only two meaningful commercial products.

French Subsidiary Uncertainty

The strategic review of the French subsidiary could potentially delay IVD timelines.

Product Revenue Decline

Product revenue experienced a year-over-year decline of 18%, impacted by ongoing supply chain issues affecting Prosigna nCounter.

Veracyte (VCYT) vs. S&P 500 (SPY)

Market Cap

$2.54B

Dividend YieldN/A

Average Volume (3M)1.07M

Price to Earnings (P/E)98.7

Beta (1Y)1.84

Revenue Growth23.46%

EPS GrowthN/A

CountryUS

Employees824

SectorHealthcare

Sector Strength74

IndustryBiotechnology

Share Statistics

EPS (TTM)0.31

Shares Outstanding77,944,770

10 Day Avg. Volume1,078,808

30 Day Avg. Volume1,069,211

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)5.56

Price to Cash Flow (P/CF)25.30

P/FCF Ratio25.30

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$43.57

Price Target Upside44.03% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering8

Veracyte Business Overview & Revenue Model

Company DescriptionVeracyte, Inc. is a genomic diagnostics company that leverages advanced genomic technology to improve diagnostic accuracy and outcomes for patients. Operating primarily in the healthcare and biotechnology sectors, the company focuses on developing and commercializing diagnostic tests that aid in the diagnosis of various diseases, particularly in oncology and pulmonology. Veracyte's core products include genomic tests like the Afirma Thyroid FNA Analysis and the Envisia Genomic Classifier, which provide critical genomic insights to guide treatment decisions.

How the Company Makes MoneyVeracyte generates revenue through the sale of its proprietary genomic tests to healthcare providers and institutions. The company's revenue model is primarily based on test volume, with healthcare providers ordering tests for patients who require more precise diagnostic information. Veracyte also partners with pharmaceutical companies and research institutions to provide data and insights derived from its genomic technologies, further contributing to its revenue streams. Additionally, Veracyte may receive reimbursement from insurance companies and government healthcare programs for its diagnostic tests, making these partnerships and reimbursement arrangements significant factors in its earnings.

Veracyte Financial Statement Overview

Summary

Veracyte exhibits strong financial health with significant revenue growth and improving profitability. The company has a healthy gross profit margin and a positive net profit margin. Its balance sheet is robust with low leverage, and its cash flow generation is efficient and growing.

Income Statement

Positive

Veracyte has shown significant revenue growth from $361.05 million in 2023 to $445.76 million in TTM, indicating a strong upward trajectory. The gross profit margin is healthy at 65.98%, and the net profit margin has turned positive to 5.42% from negative in previous years, signaling improving profitability. EBIT and EBITDA margins are positive at 3.74% and 9.36%, respectively, marking a notable turnaround from prior losses.

Balance Sheet

Positive

The company's balance sheet is robust with a high equity ratio of 90.47% and a low debt-to-equity ratio of 0.04, reflecting financial stability and low leverage risk. Return on equity is modest at 2.05%, but the strong equity base and low debt levels suggest solid financial health.

Cash Flow

Positive

Veracyte's cash flow is strong with a significant operating cash flow of $75.10 million and a free cash flow of $63.81 million, both showing substantial growth from the previous year. The operating cash flow to net income ratio is robust at 3.11, indicating efficient cash generation relative to net income.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
445.76M	361.05M	296.54M	219.51M	117.48M
	Gross Profit
298.14M	248.15M	194.95M	145.11M	76.03M
	EBIT
16.14M	-85.80M	-41.08M	-81.90M	-35.39M
	EBITDA
49.20M	-49.41M	-6.98M	-60.18M	-25.77M
	Net Income Common Stockholders
24.14M	-74.40M	-36.56M	-75.56M	-35.85M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
289.44M	216.45M	178.85M	173.20M	349.36M
	Total Assets
1.30B	1.11B	1.16B	1.19B	457.16M
	Total Debt
50.74M	12.63M	14.72M	18.85M	12.32M
	Net Debt
-188.35M	-203.82M	-139.53M	-154.34M	-337.05M
	Total Liabilities
124.07M	70.80M	81.22M	91.31M	35.93M
	Stockholders Equity
1.18B	1.04B	1.08B	1.10B	421.23M
Cash Flow		Free Cash Flow
63.81M	34.26M	-1.01M	-37.00M	-12.55M
	Operating Cash Flow
75.10M	44.22M	7.54M	-31.62M	-9.71M
	Investing Cash Flow
-56.27M	15.11M	-29.39M	-739.21M	-3.84M
	Financing Cash Flow
4.90M	2.84M	3.49M	596.32M	203.59M

Veracyte Technical Analysis

Technical Analysis Sentiment

Negative

Last Price30.25

Price Trends

50DMA

35.18

Negative

100DMA

38.45

Negative

200DMA

34.19

Negative

Market Momentum

MACD

-1.71

Negative

RSI

33.65

Neutral

STOCH

16.21

Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For VCYT, the sentiment is Negative. The current price of 30.25 is below the 20-day moving average (MA) of 30.83, below the 50-day MA of 35.18, and below the 200-day MA of 34.19, indicating a bearish trend. The MACD of -1.71 indicates Negative momentum. The RSI at 33.65 is Neutral, neither overbought nor oversold. The STOCH value of 16.21 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for VCYT.

Veracyte Risk Analysis

Veracyte disclosed 57 risk factors in its most recent earnings report. Veracyte reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Veracyte Peers Comparison

Overall Rating

UnderperformOutperform

Sector (48)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
VCEL	68 Neutral	$2.22B	239.65	4.00%	―	20.10%	―
VCYT	61 Neutral	$2.54B	98.69	2.17%	―	23.46%	―
ARDX	60 Neutral	$1.07B	―	-23.01%	―	168.06%	44.66%
XENE	48 Neutral	$2.42B	―	-27.85%	―	―	-10.19%
Sector *	48 Neutral	$6.36B	1.28	-45.04%	2.64%	19.24%	1.69%
IMVT	37 Underperform	$2.53B	―	-74.17%	―	―	-43.10%
MLTX	37 Underperform	$2.30B	―	-25.24%	―	―	-147.80%

* Healthcare Sector Average

Performance Comparison

VCYT

Veracyte

30.25

10.02

49.53%

VCEL

Vericel

41.90

-6.00

-12.53%

ARDX

Ardelyx

4.25

-2.81

-39.80%

XENE

Xenon

30.73

-10.57

-25.59%

IMVT

Immunovant

14.79

-14.56

-49.61%

MLTX

MoonLake Immunotherapeutics

33.97

-9.94

-22.64%

Veracyte Earnings Call Summary

Earnings Call Date: Feb 24, 2025 | % Change Since: -23.15% | Next Earnings Date: May 13, 2025

Earnings Call Sentiment Neutral

The earnings call highlighted significant achievements in revenue growth and market penetration, particularly with the Decipher test. However, there are notable challenges, including a decline in product revenue and potential operational changes in the French subsidiary that could impact future performance and product availability.

Highlights

Record Year for Veracyte

2024 was a record year with Q4 revenue totaling $119 million, marking a 21% year-over-year growth. Full-year total revenue reached $446 million, a robust growth of 23% year-over-year.

Testing Revenue Growth

Testing revenue, which accounts for almost 95% of the business, grew 28% year-over-year, with the fourth quarter showing a 24% increase over the prior year.

Decipher Test Performance

Decipher tests delivered more than 80,000 tests in 2024, a volume growth of 36%. Fourth quarter Decipher volume grew 45% year-over-year to a new record of more than 22,400 tests.

Adjusted EBITDA Margin

The company delivered a full year adjusted EBITDA margin of 20.6% and generated more than $70 million in cash.

Lowlights

Decline in Product Revenue

Product revenue was $3 million, down 18% year-over-year due to continued supply and manufacturing challenges.

Challenges with French Subsidiary

Veracyte is considering no longer funding its French subsidiary, Veracyte SAS, due to declines in biopharma and manufacturing challenges, potentially leading to bankruptcy proceedings.

Impact on Prosigna Manufacturing

The potential change in the French operation could impact the manufacturing and supply of Prosigna nCounter, depending on finding a buyer for this portion of the business.

Company Guidance

In the Veracyte Fourth Quarter and Full Year 2024 Financial Results webcast, the company provided a robust guidance for 2025. Veracyte anticipates testing revenue to grow between 12% to 15% year-over-year, reaching $470 million to $480 million, with an adjusted EBITDA margin improvement of approximately 100 basis points. The company also highlighted significant growth metrics from 2024, including a 21% year-over-year increase in Q4 revenue to $119 million and a 23% rise in full-year revenue to $446 million. Testing revenue, which forms nearly 95% of their business, surged by 28% year-over-year, with Decipher volume growing 36% in 2024 and 45% in Q4 compared to the previous year. For 2025, Veracyte expects to continue its growth trajectory, driven by strategic initiatives such as the expansion of Decipher into metastatic populations, with anticipated volume benefits in the latter half of the year, and maintaining strong growth in the Afirma franchise with high-single-digit revenue growth. Additionally, the company is making strides in international expansion and advancing its MRD platform, while also managing a potential operational shift regarding its French subsidiary.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.