Veracyte (NASDAQ: VCYT) and CareDx (NASDAQ:CDNA) are both small-cap medical companies, but which is the superior investment? We will contrast the two businesses based on the strength of their risk, valuation, institutional ownership, earnings, dividends, analyst recommendations and profitabiliy.

Analyst Ratings

This is a summary of recent recommendations for Veracyte and CareDx, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Veracyte 0 0 6 0 3.00
CareDx 0 0 0 0 N/A

Veracyte currently has a consensus price target of $12.40, indicating a potential upside of 50.85%. Given Veracyte’s higher probable upside, analysts clearly believe Veracyte is more favorable than CareDx.

Insider & Institutional Ownership

63.2% of Veracyte shares are held by institutional investors. Comparatively, 36.5% of CareDx shares are held by institutional investors. 13.4% of Veracyte shares are held by insiders. Comparatively, 5.4% of CareDx shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Profitability

This table compares Veracyte and CareDx’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Veracyte -43.40% -66.79% -34.90%
CareDx -77.02% -69.67% -20.13%

Risk and Volatility

Veracyte has a beta of 1.93, indicating that its stock price is 93% more volatile than the S&P 500. Comparatively, CareDx has a beta of 0.7, indicating that its stock price is 30% less volatile than the S&P 500.

Valuation & Earnings

This table compares Veracyte and CareDx’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Veracyte $67.97 million 4.10 -$23.99 million ($0.98) -8.39
CareDx $45.65 million 0.61 -$11.23 million ($2.01) -0.65

CareDx has higher revenue, but lower earnings than Veracyte. Veracyte is trading at a lower price-to-earnings ratio than CareDx, indicating that it is currently the more affordable of the two stocks.

Summary

Veracyte beats CareDx on 10 of the 12 factors compared between the two stocks.

Veracyte Company Profile

Veracyte, Inc. is a genomic diagnostics company. The Company uses genomic technology to resolve diagnostic ambiguity. It targets diseases in which patients undergo invasive diagnostic procedures. Its products combine genomic technology, clinical science and machine learning. The Company commercializes over three genomic tests, which are transforming the diagnosis of thyroid cancer, lung cancer and idiopathic pulmonary fibrosis. The Company’s commercial solution, the Afirma Thyroid fine needle aspiration (FNA) Analysis, centers on the Afirma Gene Expression Classifier (GEC). The Afirma GEC is offered directly or as part of a solution that also includes cytopathology. The Company operates in the pulmonology diagnostics market. It offers Percepta Bronchial Genomic Classifier, a genomic test to resolve ambiguity in lung cancer diagnosis. It also offers the Envisia Genomic Classifier, which is designed to help in the assessment of patients suspected to have idiopathic pulmonary fibrosis.

CareDx Company Profile

CareDx, Inc. is a molecular diagnostics company. The Company is focused on the discovery, development and commercialization of clinically differentiated diagnostic surveillance solutions for transplant patients. The Company’s commercialized testing solution, the AlloMap heart transplant molecular test (AlloMap), is a gene expression test that helps clinicians monitor and identify heart transplant recipients with stable graft function having a low probability of moderate/severe acute cellular rejection. Its products under development for transplant monitoring include AlloSure, a development-stage transplant surveillance solution, which applies next generation sequencing to detect and quantitate genetic differences between donor-derived cell-free deoxyribonucleic acid (dd-cfDNA) in the blood stream emanating from the donor heart. It offers the AlloMap Score Variability service, which provides complementary information to help personalize long-term care of heart transplant recipients.

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