Veracyte (VCYT) Up 9.2% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Veracyte (VCYT). Shares have added about 9.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Veracyte due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Veracyte's Q2 Earnings Top Estimates, '24 Sales View Up
Veracyte delivered second-quarter 2024 adjusted diluted earnings of 30 cents per share, up a stupendous 150% from the year-ago period’s level. The reported figure beat the Zacks Consensus Estimate of a loss of 3 cents per share.
Revenues
Revenues increased 26.7% year over year to $114.4 million, which outpaced the Zacks Consensus Estimate by 14%.
Segmental Details
Testing revenues totaled $107 million in the reported quarter, up 31% year over year. This rise was mainly due to increased Decipher and Affirma volumes.
Product revenues fell 3% year over year to $3.9 million.
Biopharmaceutical and other revenues of $3.6 million reflected a 22% decrease from the prior-year quarter’s figure. This was mainly due to the overall spending constraints across the industry.
Margins
The total cost of revenues (product, testing, biopharmaceutical and other) was $33.6 million, up 13.2% year over year.
The gross profit rose 33.3% to $80.8 million. The gross margin expanded 350 basis points (bps) to 70.6%.
Selling and marketing expenses fell 5.9% to $24.2 million, while general and administrative expenses increased 26.7% to $31.7 million. R&D expenses totaled $16.5 million, up 31.3% year over year. The company delivered an operating profit of $8.4 million in the second quarter against an operating loss of $2.7 million during the prior-year period.
Cash, Capital Structure and Solvency
Veracyte exited the second quarter with cash and cash equivalents of $235.9 million compared with $209.2 million at the end of the first quarter of 2024.
The cumulative net cash outflow from operating activities at the end of the reported quarter was $20.6 million compared with $14.5 million at the end of the second quarter of 2023.
Guidance
Vertacyte provided a revised financial outlook for 2024.
Revenues for 2024 are now expected to be in the band of $432-$438 million (up from the previous guidance of $402-$410 million), representing year-over-year growth of 20-21% and testing revenue growth of approximately 25%. The top-line estimate is currently pegged at $406.1 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
The consensus estimate has shifted 135.71% due to these changes.
VGM Scores
At this time, Veracyte has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. However, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Veracyte has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Veracyte is part of the Zacks Medical - Instruments industry. Over the past month, Teleflex (TFX), a stock from the same industry, has gained 8.7%. The company reported its results for the quarter ended June 2024 more than a month ago.
Teleflex reported revenues of $749.69 million in the last reported quarter, representing a year-over-year change of +0.9%. EPS of $3.42 for the same period compares with $3.41 a year ago.
Teleflex is expected to post earnings of $3.38 per share for the current quarter, representing a year-over-year change of -7.1%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.3%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for Teleflex. Also, the stock has a VGM Score of F.
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Veracyte, Inc. (VCYT) : Free Stock Analysis Report
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