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Invitae (NVTA) Scales a New 52-Week High on Solid Prospects

Zacks Equity Research

Share price of Invitae Corporation NVTA scaled a new 52-week high of $21.32 on Mar 8, closing nominally lower at $20.84. The company has gained 52% over the last six months against the broader industry’s 15.8% decline. The S&P 500 index saw a decline of 4.8% over this period.

The company, with a market cap of $1.82 billion, has a trailing four-quarter average positive earnings surprise of 5.49%.

Its five-year historical growth rate is favorable at 215.8% as compared with the industry’s 33.3% and the S&P 500’s 3.9%.

Invitae reported revenue growth of 116.5% in 2018, compared with the industry’s 8.4% and the S&P 500’s 6.8%. The company registered earnings growth rate of 25.3% against the industry’s decline of 7% and the S&P’s growth of 23.7%.

Invitae currently carries a Zacks Rank #3 (Hold).

Factors Working in Favor

One of the key growth drivers for the company has been an increase in the number of billable tests over the past year. The company registered strong volume growth across all diagnostic areas, from old to new accounts. Robust growth in volume was reported from international markets as well, which contributed about 10% to the fast-growing segment of testing pertaining to its biopharma partner programs.

Banking on increasing collection rates from third-party payers like Medicare and several institutional and pharma partners, the company has seen steady growth in revenues of late.
In late 2018, the company signed 11 new partnerships with biopharma companies, health systems and major cancer centers, thereby expanding its network. This has created quite a lot of optimism in the market. Invitae’s continued investment in its selling, marketing, research and dvelopment divisions should boost profits going ahead.

In February 2019, the genetics major launched non-invasive prenatal screening, expanding its portfolio of genetic testing services for women’s health. Prior to this, Invitae had launched a comprehensive genetic screening to expand its reproductive health portfolio.  Recently, the company partnered with Alnylam pharmaceuticals to enable access to genetic testing for patients of primary hyperoxaluria. These developments are expected to fuel growth.

All these factors have lifted the company’s stock to a 52-week high.

Key Picks

A few better-ranked stocks in the broader medical space are ABIOMED, Inc., ABMD, Penumbra, Inc. PEN and Masimo, Inc. MASI. Notably, each of these stocks currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

ABIOMED’s long-term earnings growth rate is expected at 27.67%.

Penumbra’s long-term earnings growth rate is projected at 20.93%.

Masimo’s long-term earnings are projected to grow 15.60%.

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