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Gauging Veracyte’s Newly Added Risk Factors?
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Gauging Veracyte’s Newly Added Risk Factors?

Veracyte (VCYT) is a genomic diagnostics company based in California. It provides tests for cancers and other diseases. 

Let’s take a look at the company’s latest financial performance, corporate developments, and newly added risk factors. (See Veracyte stock charts on TipRanks)

Veracyte’s Q2 Financial Results and 2021 Outlook

Revenue increased 166% year-over-year to $55.1 million in Q2 2021, exceeding the consensus estimate of $48.1 million. Net loss per share was $0.13, which improved from the loss per share of $0.22 in the same quarter last year, and beat the consensus estimate of a loss per share of $0.25. Veracyte ended Q2 with $327.5 million in cash.

For 2021, the company raised revenue guidance to a range of $200 million to $208 million. The consensus estimate calls for revenue of $197.9 million. Veracyte previously anticipated revenue in the range of $190 million to $200 million. The new outlook suggests revenue growth of up to 76%.

Veracyte’s Corporate Developments

Veracyte has completed the acquisition of HalioDx, an immuno-oncology diagnostics provider that serves drug development organizations. HalioDx operates laboratories in the U.S. and France. It also has a manufacturing facility in France.

Veracyte counts on HalioDx to expand its reach into global markets. Furthermore, HalioDx will broaden its test scope into eight of the top 10 cancers. Veracyte acquired HalioDx for 260 million Euros in a cash and stock transaction. 

Acquisitions have been a part of Veracyte’s growth strategy. The company previously acquired Decipher Biosciences this March, which helped expand its diagnostic reach into seven of the top 10 cancers. It paid $600 million in cash for the acquisition.

Veracyte’s Risk Factors

The new TipRanks Risk Factors tool reveals 62 risk factors for Veracyte. Since Q4 2020, the company has updated its risk profile with nine new risk factors.

Veracyte tells investors that it may face difficulties integrating Decipher Biosciences, such as incurring unexpected expenses. As a result, it may not fully achieve the anticipated benefits of the acquisition.

Similarly, Veracyte cautions investors that achieving the expected benefits of the HalioDx acquisition will depend on its ability to successfully integrate the business. It further added that doing business internationally at HalioDx’s scale presents operational challenges that could adversely impact its growth prospects.

The company says that upon acquisition of a business, it records goodwill and intangible assets at fair value. It warns that an impairment of goodwill or other intangible assets could cause a material adverse effect on its operating results and the financial condition. 

Veracyte also cautions that if it is unable to grow sales of its newly acquired tests, its results of operations may be adversely impacted.

The majority of Veracyte’s risk factors fall under the Finance and Corporate category, with 34% of the total risks. That is above the sector average of 29%. Veracyte’s stock has declined about 3% year-to-date.

Analysts’ Take on Veracyte

Leerink Partners analyst Puneet Souda recently reiterated a Buy rating on Veracyte stock with a price target of $60. Souda’s price target suggests 25.8% upside potential.

Consensus among analysts is a Moderate Buy based on four Buys and one Sell. The average Veracyte price target of $56.80 implies 19.13% upside potential to current levels.

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