Veracyte, Inc.’s (NASDAQ:VCYT) Shift From Loss To Profit
Veracyte, Inc.’s (NASDAQ:VCYT): Veracyte, Inc. operates as a genomic diagnostics company in the United States and internationally. The US$851m market-cap company announced a latest loss of -US$23.0m on 31 December 2018 for its most recent financial year result. Many investors are wondering the rate at which VCYT will turn a profit, with the big question being “when will the company breakeven?” I’ve put together a brief outline of industry analyst expectations for VCYT, its year of breakeven and its implied growth rate.
View our latest analysis for Veracyte
Consensus from the 4 Biotechs analysts is VCYT is on the verge of breakeven. They expect the company to post a final loss in 2020, before turning a profit of US$5.1m in 2021. VCYT is therefore projected to breakeven around 2 years from today. What rate will VCYT have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 64%, which signals high confidence from analysts. If this rate turns out to be too aggressive, VCYT may become profitable much later than analysts predict.
Given this is a high-level overview, I won’t go into details of VCYT’s upcoming projects, however, bear in mind that typically a biotech has lumpy cash flows which are contingent on the product type and stage of development the company is in. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.
Before I wrap up, there’s one aspect worth mentioning. VCYT has managed its capital judiciously, with debt making up 32% 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.
Next Steps:
There are too many aspects of VCYT to cover in one brief article, but the key fundamentals for the company can all be found in one place – VCYT’s company page on Simply Wall St. I’ve also put together a list of relevant factors you should further examine:
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.
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If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.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. Thank you for reading.
