CareDx (CDNA) is up about 14% today after BTIG raised its price target from $60 to $74 and maintained its Buy rating.
That’s a big move for a target bump – and there may be even more upside to be had…
The details
BTIG hosted CareDx’s CEO, CFO, and head of investor relations for investor meetings in Boston earlier this week, and came away more bullish:
- Target raised 23%, from $60 to $74
- Management sounded confident after the positive resolution of the transplant local coverage determination (this is a Medicare rule for whether a test gets covered).
- Strong growth in the core transplant testing business
- Excitement about the oncology pipeline, including the Naveris acquisition for MRD (that’s minimal residual disease – looking for traces of cancer left after treatment) testing and its own AlloHeme test
The real story: the multiple gap
According to BTIG (and I verified with TIKR data), CareDx trades at 5.1 times Wall Street’s 2026 revenue estimates. Meanwhile, per BTIG, specialty lab peers trade at 12.9 times estimates, and oncology diagnostics peers go for 15 to 19 times.
Take Natera (NTRA) as a good example – it trades at a price/sales of 18x forward estimates and directly competes with CareDx in transplant testing, plus it has a leading oncology MRD test (Signatera).
In other words, the Street is paying CareDx like a niche transplant business. If the market starts treating it like part-transplant, part-oncology, there’s a lot of potential upside to be had.
And the core business isn’t standing still. Last quarter, revenue grew 52% to $132 million as the business steadily picks up.
What’s next
The stock is already up over 200% this year, so a lot of good news is priced in.
The oncology story is also…still very early. Naveris is an acquisition, and AlloHeme is still in the pipeline. Neither has to prove much today, but both have to deliver for the peer-multiple argument to hold.
My two cents? See if more analysts start to move in CareDx’s direction and how the Naveris integration goes. If CareDx is a long-term winner, there’s still plenty more time for the story to play out.
