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Veracyte, Inc.'s (NASDAQ:VCYT): Veracyte, Inc. operates as a genomic diagnostics company in the United States and internationally. The US$1.0b market-cap company announced a latest loss of -US$12.6m on 31 December 2019 for its most recent financial year result. As path to profitability is the topic on VCYT’s investors mind, I’ve decided to gauge market sentiment. Below I will provide a high-level summary of the industry analysts’ expectations for VCYT.
Consensus from the 6 Biotechs analysts is VCYT is on the verge of breakeven. They expect the company to post a final loss in 2021, before turning a profit of US$5.6m in 2022. So, VCYT is predicted to breakeven approximately 2 years from today. How fast will VCYT have to grow each year in order to reach the breakeven point by 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 5.7% year-on-year, on average, which is fair. If this rate turns out to be too low, VCYT may become profitable faster than analysts expect.
I’m not going to go through company-specific developments for VCYT given that this is a high-level summary, however, keep in mind that generally biotechs, depending on the stage of product development, have irregular periods of cash flow. So, periods of lower growth in the upcoming years is not out of the ordinary, particularly when a company is in a period of investment.
Before I wrap up, there’s one aspect worth mentioning. VCYT has managed its capital judiciously, with debt making up 0.3% of equity. This means that VCYT has predominantly funded its operations from equity capital,and its low debt obligation reduces the risk around investing in the loss-making company.
There are key fundamentals of VCYT which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at VCYT, take a look at VCYT’s company page on Simply Wall St. I’ve also compiled a list of relevant aspects you should further research:
Valuation: What is VCYT worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether VCYT is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Veracyte’s board and the CEO’s back ground.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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