William Blair initiates coverage on CareDx stock with Market Perform rating

Investing.com - William Blair initiated coverage on CareDx, Inc (NASDAQ:CDNA) with a Market Perform rating on Monday, citing potential for improvement despite recent challenges. The stock, which InvestingPro data shows has gained over 9% in the past week, currently appears undervalued according to Fair Value analysis.

The research firm noted that CareDx has faced significant business pressures recently, including ongoing reimbursement difficulties, patent litigation, securities investigations, and executive leadership changes. Despite these challenges, the company maintains strong financial health with a current ratio of 3.3x and more cash than debt on its balance sheet.

William Blair indicated that downside risk related to the draft Local Coverage Determination (LCD) appears to be priced into the stock already, though shares may remain in a holding pattern until the LCD is finalized.

The firm suggested that once the LCD is finalized, CareDx shares could potentially "rebase and move much higher" from current levels.

Management estimates the draft LCD could create a full-year revenue headwind of $15 million-$30 million, though William Blair believes key growth drivers remain intact, including market growth, customer adoption, adherence, ASP expansion, and pipeline development.

In other recent news, CareDx Inc. reported its second-quarter 2025 earnings, showing a mixed performance. The company exceeded earnings per share expectations with $0.10, contrary to the anticipated loss of $0.10. However, CareDx’s revenue of $86.7 million did not meet the forecasted $90.62 million, resulting in a revenue shortfall of 4.33%. BTIG responded to these developments by lowering its price target for CareDx to $22.00 from $26.00, while maintaining a Buy rating. This adjustment reflects concerns over recent Medicare reimbursement proposals that could impact the company. Additionally, CareDx delivered quarterly results that aligned with expectations for the second quarter and adjusted its full-year guidance, maintaining the midpoint for projected revenue of $370 million, which indicates an 11% growth year-over-year. These recent developments highlight the challenges and expectations facing CareDx in the current financial landscape.

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