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

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 -35.64% -53.58% -29.07%
CareDx -61.27% -85.68% -21.21%

Analyst Ratings

This is a breakdown of recent ratings for Veracyte and CareDx, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Veracyte 0 0 5 0 3.00
CareDx 0 0 0 0 N/A

Veracyte currently has a consensus price target of $13.00, suggesting a potential upside of 61.09%. Given Veracyte’s higher possible upside, equities research analysts plainly believe Veracyte is more favorable than CareDx.

Earnings & Valuation

This table compares Veracyte and CareDx’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Veracyte $71.70 million 3.81 -$20.10 million ($0.80) -10.09
CareDx $46.96 million 0.90 -$9.83 million ($1.44) -1.37

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.

Institutional and Insider Ownership

63.6% of Veracyte shares are owned by institutional investors. Comparatively, 35.6% of CareDx shares are owned by institutional investors. 13.4% of Veracyte shares are owned by insiders. Comparatively, 5.4% of CareDx shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Volatility and Risk

Veracyte has a beta of 1.91, meaning that its stock price is 91% more volatile than the S&P 500. Comparatively, CareDx has a beta of 0.78, meaning that its stock price is 22% less volatile than the S&P 500.

Summary

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

About Veracyte

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.

About CareDx

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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