Our Healthcare analyst Tom Tobin and Healthcare Policy Analyst Emily Evans are hosting a call on 12/12 at 2:00pm ET for a key update to our Invitae (NVTA) short thesis. If you are an institutional investor interested in accessing this call or related research please email sales@hedgeye.com.
The Amazon of Genetic Testing
Invitae may someday become the "Amazon of Genetic Testing," but we don't expect that to happen in 2020. Rather, we expect 2020 revenue to come in near our $310M estimate and below consensus of $333M. If we are right, we would expect the shares to trend toward the historic average EV/Sales of 2.9X or below and 30% to 50% below current levels.
NVTA has set out on a rational strategy of lowering costs, lowering price, and providing high quality genetic testing services. However, the market may not become rational enough for the strategy to bear fruit in the near term.
We suspect the number of players with less rational approaches, or business plans with indirect revenue sources, will remain high and even expand in the near term.
Highlights of the presentation will include:
- Invitae patient and claims volume trend
- Invitae volume by diagnosis code
- Invitae volume by CPT code and "code signature"
- Breast cancer testing (BRCA) where others appear to have done better taking market share
- Has the sales force expansion been successful?
- Genetic Testing Registry, a growing list of competitors, is Invitae keeping up?
- Capital raising in the genetic testing industry, it is getting more rational, but maybe not soon enough
- Policy and Regulation of Genetic Testing - do the big IDNs need to make money on genetic testing?
- The UNH Preferred Lab Network is a positive, but how much
- Yes, you should worry about the politics and policy of genetic privacy
- Forecast model including timing of additional capital raises
If you are an institutional investor interested in accessing this call or related research please email sales@hedgeye.com.
