Janney Initiates CareDx With Buy Rating, $12 Target

Janney Montgomery Scott’s Paul Knight has initiated coverage of CareDx Inc CDNA with a Buy rating and fair value estimate of $12.

Unlike most of its peers, Knight believes that CareDx has meaningfully greater upside potential. The company is a leader in the heart transplant diagnostics segment, with market share of about 30 percent.

With the acquisition of Sweden-based Allenex expected to close in March, CareDx is set to enter the pre-transplant market, while entering the kidney transplant market in 1H2016 with initial kidney transplant test data.

Knight believes that the M&A and clinical data expected over the next four months would act as catalysts, and that the company’s balance sheet was funded.

“Capital risk is lower than most peers as the company has a positive cash flow core businesses and a new $50 million line-of-credit that can fund operations to profitability over the next five years,” Knight noted.