Scotiabank maintains Veracyte stock with $44 target

On Wednesday, Scotiabank (TSX:BNS) reaffirmed its Sector Outperform rating and $44.00 price target for Veracyte, Inc (NASDAQ:VCYT). The continued growth in test volumes for Decipher Prostate and Afirma, which saw year-over-year increases of 37% and 11% respectively, was highlighted by the firm as a sign of Veracyte’s strengthening competitive position. These tests are considered to provide the most comprehensive insights in their respective categories. This growth has contributed to Veracyte’s impressive 23.4% year-over-year revenue growth and industry-leading 70.4% gross margin. InvestingPro analysis reveals 11 additional key insights about Veracyte’s growth potential.

Scotiabank’s analyst pointed to several promising developments in Veracyte’s pipeline, including the anticipated mid-2026 launch of the Prosigna Laboratory Developed Test (LDT), which is expected to complement future breast cancer minimal residual disease (MRD) testing. Additionally, the completion of enrollment for the Percepta Nasal Swab pivotal trial is projected for the third quarter of 2025, and the Prosigna/Decipher in vitro diagnostics (IVD) development is slated to be completed by the end of 2026.

The analyst anticipates that the Decipher and Afirma tests will continue to contribute strongly in the near to medium term, with revenue growth for these tests projected at around 13% in 2026. Moreover, significant contributions from MRD testing are expected in the medium term, with international IVD and Nasal Swab tests predicted to drive growth in the longer term.

Veracyte’s current industry-leading adjusted EBITDA margins were also noted, with the company aiming for continued margin expansion, targeting approximately a 25% adjusted EBITDA margin by 2028. This financial goal is part of Veracyte’s broader strategy, which includes executing on pipeline development plans and investing in commercial expansions to support growth into new indications. The analyst concluded with a positive outlook on Veracyte’s cash flow, expecting it to be positive again this year. This outlook is supported by InvestingPro data showing strong financial health with an overall score of 3.3 (GREAT), robust liquidity with a current ratio of 5.1, and minimal debt exposure. Get the complete financial picture with InvestingPro’s comprehensive research report, available for over 1,400 US stocks including Veracyte.

In other recent news, Veracyte, Inc. reported strong financial results for the first quarter of 2025, surpassing analysts’ expectations. The company achieved earnings per share (EPS) of $0.31, significantly exceeding the projected $0.02, and revenue of $114.5 million, which was above the anticipated $111.14 million. Despite the positive performance, Needham analysts have adjusted Veracyte’s stock price target from $51 to $41, while maintaining a Buy rating, citing a broader contraction in peer multiples. Veracyte’s revenue growth for the quarter was 18% year-over-year, with testing revenue rising by 19%. The company also raised its adjusted EBITDA margin guidance for 2025 to 22.5%. Additionally, Veracyte is preparing to launch the Prosigna Breast Cancer assay as a laboratory-developed test in mid-2026, aiming to leverage its established clinical reputation for adoption. The company’s financial health showed improvement, with a 410 basis point increase in non-GAAP gross margin and a 670 basis point rise in adjusted EBITDA margin.

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