NEW YORK – Craig-Hallum said Thursday that it has initiated coverage of molecular diagnostics firm Veracyte with a Buy rating and a price target of $45.
The investment bank called Veracyte a "premier" company, with leading products in growing markets and a "track record of beats and raises."
Veracyte's portfolio of tests includes assays intended to help personalize care for suspected thyroid cancer, prostate cancer, bladder cancer, and more.
In a note to investors, Craig-Hallum analyst Bill Bonello noted that Veracyte has seen sustained test revenue growth of at least 25 percent for four consecutive years. It has also managed to gain specific mention in professional guidelines for some of its core tests, including Decipher Prostate, and has seen several Medicare coverage wins, most recently a decision expanding the indications for Decipher to metastatic patients.
Looking forward, the company is currently developing a test for minimal residual disease detection, which Craig-Hallum views as a promising market.
"While we remain bullish about the long-term growth prospects, we do expect growth to decelerate a bit from 2024 levels," Bonello said, noting that the company recently announced that it is reevaluating its ownership and operation of a French subsidiary focused on IVD manufacturing.
"While this uncertainty seems to have caused some consternation among investors, we see the risk as immaterial as the business runs at a net operating loss of about $5 million per quarter and is not core to long-term growth prospects," the bankers wrote.
In early morning trading on the Nasdaq, Veracyte's stock was up about 2 percent at $32.26 per share.