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Genetic Testing Likely to Drive Invitae's (NVTA) Q1 Earnings

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Invitae Corporation is scheduled to report first-quarter 2020 results on May 5, after market close.

Its earnings missed estimates in each of the trailing four quarters, the average miss being 12.1%.

Let’s take a look at how things are shaping up prior to this announcement.

Factors to Note

Over the last few quarters, genetic testing, one of Invitae’s key business segments, has been consistently delivering robust results, a trend which is likely to have continued in the first quarter.

Lately, the company has been witnessing a rise in the number of oncology patients undergoing genetic testing. In the fourth quarter of 2019, the company accessioned more than 148000 samples for genetic testing, which reflected a strong year-over-year increase. The company also reported solid billable volume growth in the fourth quarter. This trend is expected to have continued in the first quarter of 2020.

With the recent launch of its proactive offering, the company has enabled access to genetic testing for a completely new set of customers. This has led to increased customer adoption and is likely to have driven growth in the to-be-reported quarter.

The company’s non-invasive prenatal screening (NIPS) using maternal cell-free DNA has been strengthening its portfolio of comprehensive women's health genetic testing services lately. This is expected to show on first-quarter results.

Invitae Corporation Price and EPS Surprise

 

Invitae Corporation Price and EPS Surprise

Invitae Corporation price-eps-surprise | Invitae Corporation Quote

Per management, Invitae is focused on investing in widening its genome network and signing biopharma partnerships, thereby strengthening the capabilities of the platform within this network.Since the beginning of the fourth quarter, the company has added 20 biopharma contracts as well as health systems, national physician networks and hospital partnerships.

Recently, the company expanded its Behind the Seizure program with BioMarin by partnering with two additional companies — Stoke Therapeutics and Xenon Pharmaceuticals. The continued expansion of its bio-pharma partnerships, including those of Detect, Spark and the Behind the Seizure program, are likely to have contributed to the company’s top line in the first quarter.

Invitae’s acquisitions of Singular Bio, Jungla and Clear Genetics, closed in 2019, are expected to have enhanced the scale of business and quality of customer experience in the quarter.

However, the trend of increasing operating expenses is likely  to have impacted revenues during the to-be reported quarter.

Q1 Estimates

The Zacks Consensus Estimate for total revenues of $62.1 million implies growth of 53.2% from the prior-year quarter figure. Also, the consensus mark for loss came in at 84 cents, suggesting a 78.7% fall from the prior-year quarter figure.

What Our Quantitative Model Suggests

Per our proven model, a combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases chances of an earnings beat. That is not the case here as you will see.

Earnings ESP: Invitae has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.

Zacks Rank: It carries a Zacks Rank #2.

Stocks Worth a Look

Here are a few medical stocks worth considering as they have the right combination of elements to post an earnings beat this time around.

Aurora Cannabis (ACB - Free Report) has an Earnings ESP of +9.09% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Aphria Inc. has an Earnings ESP of +35.71% and a Zacks Rank #2.

Exact Sciences Corporation (EXAS - Free Report) has an Earnings ESP of +2.28% and a Zacks Rank of 2.

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