Yahoo Finance What Does The Future Hold For CareDx, Inc (NASDAQ:CDNA)? These Analysts Have Been Cutting Their Estimates
The analysts covering CareDx, Inc (NASDAQ:CDNA) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.
After the downgrade, the consensus from CareDx's seven analysts is for revenues of US$269m in 2023, which would reflect an uneasy 16% decline in sales compared to the last year of performance. Per-share losses are expected to creep up to US$1.53. Yet before this consensus update, the analysts had been forecasting revenues of US$310m and losses of US$1.49 per share in 2023. Ergo, there's been a clear change in sentiment, with the analysts administering a notable cut to this year's revenue estimates, while at the same time increasing their loss per share forecasts.
View our latest analysis for CareDx
The consensus price target fell 32% to US$10.00, implicitly signalling that lower earnings per share are a leading indicator for CareDx's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic CareDx analyst has a price target of US$12.00 per share, while the most pessimistic values it at US$8.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with a forecast 20% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 34% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 19% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - CareDx is expected to lag the wider industry.
The Bottom Line
The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at CareDx. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that CareDx's revenues are expected to grow slower than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of CareDx's future valuation. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on CareDx after today.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple CareDx analysts - going out to 2025, and you can see them free on our platform here.
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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