Earnings Update: Here's Why Analysts Just Lifted Their CareDx, Inc (NASDAQ:CDNA) Price Target To US$13.80

As you might know, CareDx, Inc (NASDAQ:CDNA) just kicked off its latest quarterly results with some very strong numbers. CareDx outperformed estimates, with revenues of US$72m beating estimates by 14%. Statutory losses were US$0.32, 31% smaller thanthe analysts expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

See our latest analysis for CareDx

Following last week's earnings report, CareDx's seven analysts are forecasting 2024 revenues to be US$272.0m, approximately in line with the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 60% to US$1.42. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$266.9m and losses of US$1.51 per share in 2024. So there seems to have been a moderate uplift in analyst sentiment with the latest consensus release, given the upgrade to loss per share forecasts for this year.

These new estimates led to the consensus price target rising 6.2% to US$13.80, with lower forecast losses suggesting things could be looking up for CareDx. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values CareDx at US$15.00 per share, while the most bearish prices it at US$12.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 1.5% by the end of 2024. This indicates a significant reduction from annual growth of 21% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 19% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - CareDx is expected to lag the wider industry.

The Bottom Line

The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that CareDx's revenue is expected to perform worse than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for CareDx going out to 2026, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 2 warning signs for CareDx that you should be aware of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.