Invitae Corporation (NYSE: NVTA) and Veracyte (NASDAQ:VCYT) are both small-cap bio diagnostics & testing companies, but which is the better investment? We will compare the two companies based on the strength of their profitability, valuation, earnings, dividends, institutional ownership, risk and analyst recommendations.

Earnings & Valuation

This table compares Invitae Corporation and Veracyte’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Invitae Corporation $25.05 million 16.56 -$100.25 million ($2.55) -3.24
Veracyte $65.08 million 3.23 -$31.35 million ($0.80) -7.73

Veracyte has higher revenue and earnings than Invitae Corporation. Veracyte is trading at a lower price-to-earnings ratio than Invitae Corporation, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Invitae Corporation and Veracyte’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Invitae Corporation -206.95% -115.25% -67.79%
Veracyte -38.19% -52.99% -29.50%

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Invitae Corporation and Veracyte, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Invitae Corporation 0 0 3 0 3.00
Veracyte 0 2 3 0 2.60

Invitae Corporation currently has a consensus target price of $14.33, suggesting a potential upside of 73.53%. Veracyte has a consensus target price of $12.50, suggesting a potential upside of 102.27%. Given Veracyte’s higher possible upside, analysts clearly believe Veracyte is more favorable than Invitae Corporation.

Insider & Institutional Ownership

58.0% of Invitae Corporation shares are owned by institutional investors. Comparatively, 66.3% of Veracyte shares are owned by institutional investors. 9.9% of Invitae Corporation shares are owned by insiders. Comparatively, 13.4% of Veracyte shares are owned 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.

Summary

Veracyte beats Invitae Corporation on 9 of the 11 factors compared between the two stocks.

About Invitae Corporation

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 Veracyte

Veracyte, Inc. is a genomic diagnostics company. The Company uses genomic technology to resolve diagnostic ambiguity. It targets diseases in which patients undergo invasive diagnostic procedures. Its products combine genomic technology, clinical science and machine learning. The Company commercializes over three genomic tests, which are transforming the diagnosis of thyroid cancer, lung cancer and idiopathic pulmonary fibrosis. The Company’s commercial solution, the Afirma Thyroid fine needle aspiration (FNA) Analysis, centers on the Afirma Gene Expression Classifier (GEC). The Afirma GEC is offered directly or as part of a solution that also includes cytopathology. The Company operates in the pulmonology diagnostics market. It offers Percepta Bronchial Genomic Classifier, a genomic test to resolve ambiguity in lung cancer diagnosis. It also offers the Envisia Genomic Classifier, which is designed to help in the assessment of patients suspected to have idiopathic pulmonary fibrosis.

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