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On Friday, Lake Street Capital Markets initiated coverage on OncoCyte Corp (NASDAQ:OCX), assigning a Buy rating to the company’s stock along with a price target of $5.00. With a current market capitalization of $93 million, the micro-cap company trades at $3.25 per share. Lake Street’s analysis highlighted OncoCyte’s innovative approach to disrupting the market for transplant rejection testing through its VitaGraft Plus test. This test aims to be conducted in-house at transplant centers, a move that could significantly reduce the turnaround time and costs associated with third-party laboratory testing. According to InvestingPro data, the company maintains a moderate debt level with a current ratio of 1.62.
OncoCyte’s strategy intends to shift the economic benefits back to the transplant centers and the company itself. With an FDA submission planned for this year and a full commercial launch anticipated in 2026, OncoCyte is approaching a phase of potential transformative events. Despite these prospects, the company’s shares have seen a 66% decline since interim CEO Josh Riggs took charge, which Lake Street attributes to investors moving away from companies like OncoCyte that are in the pre- or early-revenue stage and have been consuming cash. In the past six months, OncoCyte has raised $39 million. The stock has shown recent momentum, posting a 35% gain year-to-date, though InvestingPro analysis indicates the company is quickly burning through cash with negative EBITDA of -$21.7 million.
Lake Street analysts believe the current market valuation of OncoCyte does not reflect the company’s potential, suggesting that the current share price offers an attractive entry point for long-term investors. The firm’s initiation of coverage with a Buy rating and a $5 price target is based on these factors, signaling confidence in OncoCyte’s future performance. With the company’s next earnings report due on April 4, investors can access comprehensive analysis and additional insights through InvestingPro’s detailed research reports, which cover over 1,400 US stocks including OCX.
In other recent news, OncoCyte Corp reported its Q4 2024 earnings, highlighting a revenue of $1.5 million from its pharma services with a 40% gross margin. The company ended the year with $10 million in cash reserves and raised an additional $29 million in February 2024. OncoCyte is actively working towards the launch of its GraftAssureDx Kidney kitted test, expected in the first half of 2026 pending FDA approval. The company is in Phase 3 of the test’s launch process, focusing on assay verification and validation, and aims to collaborate with at least 20 transplant centers in the U.S. and Germany by the end of 2025. Analyst firm Needham has maintained a Buy rating on OncoCyte with a consistent price target of $4.25, citing successful ongoing co-marketing efforts and strategic partnerships. OncoCyte has also managed to reduce its quarterly cash burn, projecting it to remain around $6 million throughout 2025. The company’s strategic advances in transplant testing and financial prudence are seen as positive indicators of its future market impact.
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