Invitae Corp: Genetics Stock Reporting Supercharged Revenue Growth

Invitae Corp: Genetics Company Reports Powerful Revenue GrowthInvitae Corp’s Revenue to More Than Double by 2020 

Genetic testing has rapidly become the norm in the healthcare field as its cost declines. A small-cap play in this growing space is Invitae Corp (NYSE:NVTA), up 55% this year but down 21% over the past three months.

Invitae provides reasonably priced advanced medical genetics testing to the medical community. The view is, as the fees decline, people become more interested in attaining critical information about their own health. This will provide a tailwind for higher demand for genetic testing.

A look at the Invitae stock chart shows a strong upward rally from $9.04 during the December 2018 lows to a 52-week high of $28.75 in August 2019.

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Chart courtesy of StockCharts.com

NVTA stock failed to hold above the $26.00 resistance level on several attempts. This was followed by a downside move to below the $16.00 support level.

Invitae stock rallied above $20.00 a few weeks back, prior to declining toward the support level, above which it’s currently hovering.

Spectacular Revenue Growth to Power NVTA Stock

Invitae Corp’s five-year revenue picture shows superlative growth, highlighted by four consecutive years of triple-digit growth to a record level in 2018.

The compound annual growth rate (CAGR) was a stellar 210% from 2014 to 2018.

Fiscal Year Revenues (Millions) Growth
2014 $1.6
2015 $8.4 422.3%
2016 $25.1 199.0%
2017 $68.2 172.4%
2018 $147.7 116.5%

(Source: “Invitae Corp.MarketWatch, last accessed December 17, 2019.)

Clearly the recent revenue growth rates are not sustainable, but the forecasts are still more than impressive.

NVTA is estimated to grow its revenues 48.9% to $219.9 million in 2019 and then by another 50.8% to $331.5 million in 2020. (Source: “Invitae Corporation (NVTA),”Yahoo! Finance, last accessed December 17, 2019.)

But the key for Invitae will be its ability to contain costs and offer a pathway to profitability, which is still likely years away.

Invitae’s earnings before interest, taxes, depreciation, and amortization (EBITDA) have been negative, as the below table shows.

Fiscal Year EBITDA (Millions) Growth
2014 -$45.0
2015 -$84.2 -86.9%
2016 -$93.6 -11.3%
2017 -$108.3 -15.6%
2018 -$104.9 -3.1%

(Source: MarketWatch, op. cit.)

Invitae narrowed its earnings-per-share (EPS) loss from 2016 to a five-year best in 2018, but analysts expect the loss to rise to $2.33 per diluted share in 2019 and to $2.46 in 2020. (Source: Yahoo! Finance, op. cit.)

Fiscal Year GAAP Diluted EPS Growth
2014 -$1.49
2015 -$3.18 -113.0%
2016 -$3.02 5.0%
2017 -$2.65 12.3%
2018 -$1.94 26.9%

(Source: MarketWatch, op. cit.)

Analyst Take

If Invitae Corp’s expected revenue growth pans out, it could provide the catalyst for a much higher price for Invitae stock.

But ultimately, investors want to see better cost control and a pathway toward positive earnings and EBITDA.

If the company can improve its cost structure and deliver on revenue, we could see a big jump in the NVTA stock price.