Here's Why VCYT Stock Could be a Great Addition to Your Portfolio Now

Veracyte’s VCYT growth in the third quarter of 2024 can be attributed to the strong momentum of Afirma. The record volume growth of the Decipher Prostrate test instills optimism. Additionally, strong financial stability bodes well. Meanwhile, headwinds such as macroeconomic issues are worrisome.In the past year, this Zacks Rank #1 (Strong Buy) company’s shares have outperformed both the industry and the S&P 500. The stock has risen 44% compared with the industry’s 4.8% growth and the S&P 500 composite’s 27.3% increase.The renowned diagnostics company has a market capitalization of $3.17 billion. The company’s earnings are likely to surge 137.2% in 2024 compared with 15.5% growth of the industry. In the trailing four quarters, VCYT delivered an average earnings surprise of 520.5%.Tailwinds for VCYT StockAfirma Continues to Outperform: Veracyte’s comprehensive Afirma solution consists of the Afirma GSC (Genomic Sequencing Classifier) and the Afirma Xpression Atlas. An estimated 600,000 people in the United States undergo this procedure each year. Afirma GSC testing is recommended in top medical guidelines and is covered for more than 275 million people with Medicare or commercial health insurance in the United States. The company reported about 15,100 Afirma test results in the third quarter of 2024, indicating a 12% uptick, based on the growing number of new customers and the retention of old ones. Taking into account the strong momentum of 2024 and the expanded indication, Veracyte expects Afirma to continue to demonstrate strong growth in the high single digits in 2025.Strength of the Decipher Franchise: One of the principal sources of VCYT’s revenues is the Decipher Prostate cancer tests. Veracyte achieved a new volume record of 21,250 tests in the third quarter of 2024, with growth across all National Comprehensive Cancer Network or NCCN’s localized risk categories. Through the third quarter, Veracyte released some favorable data on Decipher. In the third quarter alone, there were 14 publications, abstracts and presentations utilizing Decipher prostate or data from GRID.With the updated NCCN guidelines in place now, Veracyte’s urology sales force, consisting of around 50 reps, is driving adoption through awareness and education on the test utility and clinical evidence. Furthermore, the company extended the Decipher franchise into the bladder, which addresses nearly 82,000 people expected to be diagnosed with bladder cancer annually in the United States. The Decipher Bladder test became the first genomic test to be covered by Medicare for patients with bladder cancer and is expected to play a crucial role in the portfolio in the coming months.Favorable Liquidity Position: Veracyte exited the third quarter with cash and cash equivalents of $274 million (compared to $236 million at the end of the second quarter) and no current debt, reflecting strong solvency.  The company’s ability to cover near-term obligations is further supported by a strong current ratio of 5.08 compared with 4.44 in the second quarter. Image Source: Zacks Investment ResearchHeadwinds for VCYT StockMacro Issues Hurt Growth: Veracyte’s operations are susceptible to macroeconomic challenges, such as ongoing interest rate increases and inflation in the United States and global markets, as well as turmoil in the global banking and finance system, among others. Further, the ongoing geopolitical uncertainties and supply disruption can possibly affect the company’s profit margin. In the third quarter, the combined cost of product, testing and biopharmaceutical and other revenues increased 22.9% year over year, while general and administrative expenses rose 57.6%.VCYT’s Estimate TrendEstimates for Veracyte’s 2024 earnings per share (EPS) have moved north 18.7% to 38 cents in the past 30 days.The Zacks Consensus Estimate for the company’s 2024 revenues is pegged at $443.9 million, suggesting a 22.9% rise from the year-ago reported number.Other Top MedTech StocksSome other top-ranked stocks in the broader medical space are Omnicell OMCL, Penumbra PEN and ResMed RMD.Omnicell has an earnings yield of 3.7% compared to the industry’s 9.5%. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 121.74%. OMCL’s shares have risen 3.6% compared with the industry’s 19.9% growth in the past year.OMCL carries a Zacks Rank #1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.Penumbra, carrying a Zacks Rank #2 (Buy) at present, has an estimated 2024 earnings growth rate of 33.5% compared with the industry’s 15.9%. Shares of Penumbra have risen 3.2% compared with the industry’s 14.5% growth in the past year. PEN’s earnings surpassed estimates in three of the trailing four quarters and missed in one, the average surprise being 10.54%.ResMed, carrying a Zacks Rank #2 at present, has an estimated earnings growth rate of 8.9% for fiscal 2025. Its shares have surged 115.8% compared with the industry’s 32.2% growth in the past year. RMD’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 6.41%. Zacks Naming Top 10 Stocks for 2025Want to be tipped off early to our 10 top picks for the entirety of 2025?History suggests their performance could be sensational.From 2012 (when our Director of Research Sheraz Mian assumed responsibility for the portfolio) through November, 2024, the Zacks Top 10 Stocks gained +2,112.6%, more than QUADRUPLING the S&P 500’s +475.6%. Now Sheraz is combing through 4,400 companies to handpick the best 10 tickers to buy and hold in 2025. Don’t miss your chance to get in on these stocks when they’re released on January 2.Be First to New Top 10 Stocks >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Omnicell, Inc. (OMCL): Free Stock Analysis Report ResMed Inc. (RMD): Free Stock Analysis Report Penumbra, Inc. (PEN): Free Stock Analysis Report Veracyte, Inc. (VCYT): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks