InVitae Corp (NASDAQ: NVTA) and CareDx (NASDAQ:CDNA) are both small-cap healthcare companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, institutional ownership, risk, dividends, analyst recommendations, earnings and valuation.

Profitability

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

Net Margins Return on Equity Return on Assets
InVitae Corp -199.20% -153.27% -78.50%
CareDx -61.27% -85.68% -21.21%

Insider and Institutional Ownership

29.2% of CareDx shares are held by institutional investors. 5.4% of CareDx shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current ratings and target prices for InVitae Corp and CareDx, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
InVitae Corp 0 0 3 0 3.00
CareDx 0 0 2 0 3.00

InVitae Corp currently has a consensus target price of $14.33, indicating a potential upside of 45.66%. CareDx has a consensus target price of $6.75, indicating a potential upside of 69.60%. Given CareDx’s higher possible upside, analysts plainly believe CareDx is more favorable than InVitae Corp.

Earnings and Valuation

This table compares InVitae Corp and CareDx’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
InVitae Corp $40.19 million 10.66 -$99.29 million N/A N/A
CareDx $46.96 million 1.91 -$9.83 million ($1.44) -2.76

CareDx has higher revenue and earnings than InVitae Corp.

Summary

CareDx beats InVitae Corp on 8 of the 10 factors compared between the two stocks.

About InVitae Corp

Invitae Corporation utilizes an integrated portfolio of laboratory processes, software tools and informatics capabilities to process deoxyribonucleic acid (DNA)-containing samples, analyze information about patient-specific genetic variation and generate test reports for clinicians and their patients. As of December 31, 2016, the Company’s products consisted of assays totaling over 1,100 genes that could be used for multiple indications, including hereditary cancer, neurological disorders, cardiovascular disorders, pediatric disorders and other hereditary conditions. The Company offers panels for a range of hereditary conditions in cancer, cardiology, neuromuscular, pediatric and rare diseases. The Company focuses on genetic testing, genome network and genome management. The Company offers full gene sequencing and deletion/duplication analysis as a standard for all of its tests. The Company holds interests in AltaVoice, a patient-centered data company.

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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