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CareDx (CDNA - Free Report) is a Zacks Rank #5 (Strong Sell) despite beating the Zacks Consensus Estimate in each of the last four quarters. You don’t often see a stock that has beaten the number as consistently as CNDA fall to a Zacks Rank #5 (Strong Sell) so let’s take a look at why that is the case in this Bear of the Day article.
Description
CareDx, Inc. is a commercial stage company. It develops, markets, and delivers a diagnostic surveillance solution for heart transplant recipients. The Company provides AlloMap, a noninvasive blood test used to aid in the identification of heart transplant recipients. It is also pursuing other areas of transplant surveillance, such as the use of cell-free DNA (cfDNA) as a biomarker for rejection. CareDx, Inc. is based in Brisbane, California.
Earnings History
When I look at a stock, the first thing I do is look to see if the company is beating the number. This tells me right away where the market’s expectations have been for the company and how management has communicated to the market. A stock that consistently beats has management communicating expectations to Wall Street that can be achieved. That is what you want to see.
In the case of CDNA, I see four straight beats of the Zacks Consensus Estimate over the last year. This alone does not make the stock a Zacks Rank #1 (Strong Buy) and it doesn’t make it a Zacks Rank #5 (Strong Sell) either.
The Zacks Rank does care about the earnings history, but it is much more heavily influenced by the movement of earnings estimates.
Earnings Estimates
The Zacks Rank tells us which stocks are seeing earnings estimates move higher or in this case lower. For CDNA I see a mixed bag.
This quarter increased from $0.01 to $0.02.
Next quarter dropped from $0.10 to $0.05.
The Zacks Rank is more heavily influenced by the move in the annual numbers, and the movement is mixed for those numbers.
The 2021 consensus number has increased from $0.29 to $0.33.
The 2022 number has dropped from $0.47 to $0.41 over the last 60 days.
Negative movement in earnings estimates like that is why this stock is a Zacks Rank #5 (Strong Sell).
It should be noted that a majority of stocks in the Zacks universe are seeing positive earnings estimate revisions. That means that the stocks that are seeing small but negative earnings estimate revisions are falling to a Zacks Rank #5 (Strong Sell).
Image: Bigstock
Bear Of The Day:CareDX
CareDx (CDNA - Free Report) is a Zacks Rank #5 (Strong Sell) despite beating the Zacks Consensus Estimate in each of the last four quarters. You don’t often see a stock that has beaten the number as consistently as CNDA fall to a Zacks Rank #5 (Strong Sell) so let’s take a look at why that is the case in this Bear of the Day article.
Description
CareDx, Inc. is a commercial stage company. It develops, markets, and delivers a diagnostic surveillance solution for heart transplant recipients. The Company provides AlloMap, a noninvasive blood test used to aid in the identification of heart transplant recipients. It is also pursuing other areas of transplant surveillance, such as the use of cell-free DNA (cfDNA) as a biomarker for rejection. CareDx, Inc. is based in Brisbane, California.
Earnings History
When I look at a stock, the first thing I do is look to see if the company is beating the number. This tells me right away where the market’s expectations have been for the company and how management has communicated to the market. A stock that consistently beats has management communicating expectations to Wall Street that can be achieved. That is what you want to see.
In the case of CDNA, I see four straight beats of the Zacks Consensus Estimate over the last year. This alone does not make the stock a Zacks Rank #1 (Strong Buy) and it doesn’t make it a Zacks Rank #5 (Strong Sell) either.
The Zacks Rank does care about the earnings history, but it is much more heavily influenced by the movement of earnings estimates.
Earnings Estimates
The Zacks Rank tells us which stocks are seeing earnings estimates move higher or in this case lower. For CDNA I see a mixed bag.
This quarter increased from $0.01 to $0.02.
Next quarter dropped from $0.10 to $0.05.
The Zacks Rank is more heavily influenced by the move in the annual numbers, and the movement is mixed for those numbers.
The 2021 consensus number has increased from $0.29 to $0.33.
The 2022 number has dropped from $0.47 to $0.41 over the last 60 days.
Negative movement in earnings estimates like that is why this stock is a Zacks Rank #5 (Strong Sell).
It should be noted that a majority of stocks in the Zacks universe are seeing positive earnings estimate revisions. That means that the stocks that are seeing small but negative earnings estimate revisions are falling to a Zacks Rank #5 (Strong Sell).
Chart
CareDx, Inc. Price, Consensus and EPS Surprise
CareDx, Inc. price-consensus-eps-surprise-chart | CareDx, Inc. Quote