CareDx's 3-Part Bull & 3-Part Bear Cases

CareDx CDNA was initiated on by four analysts with an average price target of $13.28 (33.5 percent upside).

Mizuho has the highest expectations for CareDX, with a $15 price target.

In its research report, Mizuho laid out three aspects of the bull and bear cases.

Bull Case

1. First mover advantage while there are high barriers of entry.
2. Expansion beyond its core market, notably heart and kidney.
3. High penetration at transplant center and greater utilization for AlloMap sales.

Bear Case

1. cfDNA test may not meet efficacy results needed for adoption.
2. A lag in revenue from clinical labs.
3. A lot of competition in the DNA testing space, which will lead to IP issues.

Analyst Peter Lawson wrote, “CareDx has a stable, growing business in molecular monitoring of heart transplants (an FDA approved test) that has changed patient management, and is expanding into cell-free DNA testing in the larger kidney transplantation market. Catalysts for the stock relate to roll-out and uptake of cfDNA testing and clinical trial data for kidney that establishes clinical utility.”

The $15 price target was derived with peer multiples and a DCF. Shares of CareDx were last up 4.3 percent to $10.45.