Veracyte (VCYT) AI Stock Analysis

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Veracyte

(NASDAQ:VCYT)

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Outperform 76 (OpenAI - 5.2)

Rating:76Outperform

Price Target:

$44.00

▲(15.55% Upside)

Veracyte's strong financial performance and positive earnings call are the most significant factors driving the score. The company shows robust revenue growth and profitability, supported by strategic initiatives. However, the high P/E ratio suggests potential overvaluation, and technical indicators show strong momentum but caution due to overbought signals.

Positive Factors

Cash generation

Sustained FCF growth and a strong operating cash flow to net income ratio (1.50) indicate durable internal funding for R&D, clinical validation, and commercial expansion. Reliable cash generation reduces dilution risk and supports multi-year product rollouts and evidence generation.

Margin expansion

Material and sustained EBITDA margin improvement demonstrates scalable operations and efficiency gains from higher test volumes and cost discipline. Higher margins create long-term flexibility to invest in new tests, weather reimbursement shocks, and fund commercialization without heavy external capital.

Product adoption (Decipher)

Consistent, high-volume growth for Decipher signals durable clinical adoption and validated utility among physicians. Persistent uptake across risk categories supports predictable revenue streams, strengthens market position in oncology diagnostics, and underpins long-term organic growth.

Negative Factors

Modest return metrics

Low ROE and a relatively small net margin (~6.1%) indicate the business currently delivers limited returns on invested capital. Over the medium term, this constrains shareholder value creation unless management sustains revenue growth, margin expansion, or redeploys capital to higher-return initiatives.

Loss of biopharma revenue

A sharp decline in biopharma and other revenue following restructuring reduces revenue diversification and removes a non-test revenue buffer. Over months, this increases dependence on core diagnostic volumes and pricing, raising exposure to reimbursement shifts or demand variability in core markets.

Emerging competitive threats

New entrants like DPAI producing discordant outputs create structural competitive risk: Veracyte must invest in head-to-head evidence and clinician education to preserve trust. This may require sustained clinical studies and commercial spend, pressuring margins and slowing share gains absent clear superiority.

Veracyte (VCYT) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$3.01B

Dividend YieldN/A

Average Volume (3M)633.55K

Price to Earnings (P/E)100.3

Beta (1Y)1.16

Revenue Growth16.41%

EPS GrowthN/A

CountryUS

Employees824

SectorHealthcare

Sector Strength45

IndustryBiotechnology

Share Statistics

EPS (TTM)0.51

Shares Outstanding79,049,170

10 Day Avg. Volume700,835

30 Day Avg. Volume633,549

Financial Highlights & Ratios

PEG Ratio-0.96

Price to Book (P/B)2.58

Price to Sales (P/S)6.79

P/FCF Ratio47.47

Enterprise Value/Market Cap0.91

Enterprise Value/Revenue5.52

Enterprise Value/Gross Profit8.06

Enterprise Value/Ebitda58.05

Forecast

1Y Price Target

$46.33

Price Target Upside21.66% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering7

EPS Forecast (FY)N/A

Revenue Forecast (FY)N/A

Veracyte Business Overview & Revenue Model

Company DescriptionVeracyte, Inc. operates as a diagnostics company worldwide. The company offers Afirma Genomic Sequencing Classifier and Xpression Atlas, which are used to determine patients with indeterminate results are benign to avoid unnecessary surgery; Decipher Prostate Biopsy and Radical Prostatectomy for prostate cancer diagnosis; Prosigna Breast Cancer Assay for breast cancer diagnosis; Percepta Genomic Sequencing Classifier and Percepta Nasal Swab Test for lung cancer diagnosis; Envisia Genomic Classifier for diagnosing interstitial lung disease, including idiopathic pulmonary fibrosis; and Immunoscore Colon Cancer test for colon cancer diagnosis. It is also developing Percepta Genomic Atlas to help inform lung cancer treatment decisions; Envisia Classifier, the nCounter analysis system; and LymphMark for lymphoma subtyping test. Veracyte, Inc. has technology licensing and collaboration arrangements with Johnson & Johnson; Acerta Pharma; and CareDx. The company was formerly known as Calderome, Inc. and changed its name to Veracyte, Inc. in March 2008. Veracyte, Inc. was incorporated in 2006 and is headquartered in South San Francisco, California.

How the Company Makes MoneyVeracyte generates revenue primarily through the sale of its diagnostic tests to healthcare providers, which include hospitals, clinics, and laboratories. The company charges fees for each test performed, which are typically covered by insurance providers, thus facilitating access for patients. Additionally, Veracyte may engage in partnerships with pharmaceutical companies or research institutions that can contribute to revenue through collaborative research agreements or co-development of new tests. The company may also receive royalties or licensing fees from their intellectual property related to their diagnostic technologies.

Veracyte Key Performance Indicators (KPIs)

Any

Revenue By Segment

Revenue By Segment
Breaks down revenue by different business segments, highlighting which areas are driving growth and profitability, and indicating where the company is focusing its strategic efforts.

Chart InsightsVeracyte's testing segment is experiencing robust growth, with a 14% year-over-year increase driven by the Decipher and Afirma tests. However, product revenue is declining, down 8% year-over-year, impacted by the Veracyte SAS sale. Despite this, the company's strategic focus on expanding its testing capabilities and transitioning to cost-effective technologies is expected to sustain growth. The positive earnings call sentiment highlights strong revenue performance and future growth potential, although challenges in product revenue and margin pressures from the SAS sale remain.

Data provided by:

The Fly

Veracyte Earnings Call Summary

Earnings Call Date:Nov 04, 2025

(Q3-2025)

% Change Since: |

Next Earnings Date:Mar 02, 2026

Earnings Call Sentiment Positive

Veracyte delivered a strong quarter with record revenue growth and profitability, driven by robust performance from its core testing business, particularly Decipher and Afirma. The company achieved a significant milestone by reaching its adjusted EBITDA margin target ahead of schedule. However, challenges remain in the form of declining biopharmaceutical revenue, competitive pressures from new technologies, and a slight decrease in testing ASP.

Q3-2025 Updates

Positive Updates

Record Revenue Growth

Veracyte reported total revenue growth of 14% year-over-year to approximately $132 million in Q3 2025. Core testing business revenue grew by 18%, with significant contributions from Decipher (26% volume growth) and Afirma (13% volume growth).

Strong Profitability

Adjusted EBITDA margin reached a record 30%, representing a 650 basis point improvement from the prior year. This performance was well ahead of expectations, with the company achieving its goal of a 25% adjusted EBITDA margin more than a year ahead of internal plans.

Decipher's Clinical Utility and Growth

Decipher delivered approximately 26,700 tests in Q3, marking the 14th consecutive quarter of over 25% year-over-year volume growth. The test is increasingly recognized by physicians for its clinical utility across all risk categories, particularly in high-risk localized and metastatic patients.

Afirma's Continued Success

Afirma achieved 13% volume growth in Q3 2025, driven by new account wins and increased utilization per account. The operational efficiency program is progressing well, with a transition to a new transcriptome workflow expected to be completed by year-end.

Positive Financial Outlook

Veracyte raised its 2025 total revenue guidance to $506 million to $510 million, up from previous guidance. The adjusted EBITDA margin guidance was also raised to exceed 25% for the year.

Negative Updates

Biopharmaceutical Revenue Decline

Biopharmaceutical and other revenue decreased to $800,000 from $3.1 million in the prior year period, attributed to the restructuring and liquidation of Veracyte SAS.

Challenging Competitive Landscape

Concerns were raised about discordant results between Decipher and digital pathology AI (DPAI) scores, potentially confusing clinicians. Despite Decipher being considered the gold standard, the emergence of new technologies requires careful evidence generation to maintain leadership.

Testing ASP Decline

Testing ASP decreased by 2% compared to the prior year, primarily due to the impact of higher prior period collections and the Afirma Laboratory Benefit Manager impact.

Company Guidance

During the Veracyte Q3 2025 financial results call, the company highlighted a robust quarter with significant metrics underscoring its performance and future guidance. Veracyte reported a 14% year-over-year increase in total revenue, amounting to approximately $132 million, driven by an 18% increase in its core testing business revenue, excluding Envisia. This was further supported by a 26% volume growth in Decipher and a 13% increase in Afirma. The company's adjusted EBITDA margin reached a record 30%, marking a 650-basis point improvement from the prior year. Veracyte raised its full-year revenue guidance to $506-510 million and increased its adjusted EBITDA margin guidance to exceed 25% for 2025. The company also emphasized its strategic growth initiatives, including the sustained expansion of Decipher, the transition to the Afirma v2 transcriptome, and the upcoming launch of its MRD platform, TrueMRD, in muscle invasive bladder cancer.

Veracyte Financial Statement Overview

Summary

Veracyte demonstrates solid financial health with consistent revenue growth and strong cash flow generation. The company maintains a conservative balance sheet with low leverage, although profitability metrics suggest there is room for improvement.

Income Statement

Positive

Veracyte has shown consistent revenue growth, with a TTM revenue growth rate of 3.34%. The gross profit margin is strong at 67.61%, indicating efficient cost management. However, the net profit margin is relatively low at 6.12%, suggesting room for improvement in profitability. The EBIT and EBITDA margins have improved over the years, reflecting better operational efficiency.

Balance Sheet

Positive

The company maintains a low debt-to-equity ratio of 0.03, indicating conservative leverage. Return on equity is modest at 2.21%, showing limited profitability relative to shareholder equity. The equity ratio is healthy, suggesting a strong capital structure with a significant portion of assets financed by equity.

Cash Flow

Positive

Veracyte's cash flow position is robust, with a significant free cash flow growth rate of 26.78% in the TTM period. The operating cash flow to net income ratio is strong at 1.50, indicating good cash generation relative to net income. The free cash flow to net income ratio is also healthy at 0.65, reflecting efficient cash management.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	495.14M	445.76M	361.05M	296.54M	219.51M	117.48M
Gross Profit	339.31M	298.14M	248.15M	194.95M	145.11M	76.03M
EBITDA	47.12M	49.20M	-49.41M	-6.98M	-60.18M	-26.74M
Net Income	30.32M	24.14M	-74.40M	-36.56M	-75.56M	-34.91M
Balance Sheet
Total Assets	1.37B	1.30B	1.11B	1.16B	1.19B	457.16M
Cash, Cash Equivalents and Short-Term Investments	366.43M	289.44M	216.45M	178.85M	177.16M	349.36M
Total Debt	40.45M	50.74M	12.63M	14.72M	18.85M	12.32M
Total Liabilities	110.12M	124.07M	70.80M	81.22M	91.31M	35.93M
Stockholders Equity	1.26B	1.18B	1.04B	1.08B	1.10B	421.23M
Cash Flow
Free Cash Flow	98.21M	63.81M	34.26M	-1.01M	-37.00M	-12.55M
Operating Cash Flow	108.25M	75.10M	44.22M	7.54M	-31.62M	-9.71M
Investing Cash Flow	-57.92M	-56.27M	15.11M	-29.39M	-739.21M	-3.84M
Financing Cash Flow	-8.58M	4.90M	2.84M	3.49M	596.32M	203.59M

Veracyte Technical Analysis

Technical Analysis Sentiment

Negative

Last Price38.08

Price Trends

50DMA

43.13

Negative

100DMA

39.44

Negative

200DMA

33.75

Positive

Market Momentum

MACD

-1.04

Positive

RSI

34.79

Neutral

STOCH

7.37

Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For VCYT, the sentiment is Negative. The current price of 38.08 is below the 20-day moving average (MA) of 42.03, below the 50-day MA of 43.13, and above the 200-day MA of 33.75, indicating a neutral trend. The MACD of -1.04 indicates Positive momentum. The RSI at 34.79 is Neutral, neither overbought nor oversold. The STOCH value of 7.37 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for VCYT.

Veracyte Risk Analysis

Veracyte disclosed 57 risk factors in its most recent earnings report. Veracyte reported the most risks in the "Finance & Corporate" category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Veracyte Peers Comparison

Overall Rating

UnderperformOutperform

Sector (51)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
VCYT	76 Outperform	$3.01B	100.29	2.49%	―	16.41%	―
ARQT	60 Neutral	$3.11B	-71.57	-28.17%	―	129.21%	80.35%
TVTX	56 Neutral	$2.78B	-28.66	-410.78%	―	114.22%	77.02%
CELC	56 Neutral	$5.06B	-29.80	-122.04%	―	―	-40.75%
IMVT	56 Neutral	$5.24B	-9.19	-95.93%	―	―	-27.70%
IRON	52 Neutral	$2.92B	-14.43	-34.78%	―	―	-34.96%
Sector *	51 Neutral	$7.86B	-0.30	-43.30%	2.27%	22.53%	-2.21%

* Healthcare Sector Average

Performance Comparison

VCYT

Veracyte

38.08

-7.40

-16.27%

TVTX

Travere Therapeutics

31.09

10.63

51.96%

CELC

Celcuity

109.42

97.47

815.65%

IMVT

Immunovant

26.00

4.26

19.60%

ARQT

Arcutis Biotherapeutics

25.37

12.13

91.62%

IRON

Disc Medicine

77.32

21.52

38.57%

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Nov 25, 2025