Critical Comparison: Veracyte (NASDAQ:VCYT) versus Vermillion (VRML)

Veracyte (NASDAQ: VCYT) and Vermillion (NASDAQ:VRML) are both small-cap medical companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, profitabiliy, risk, institutional ownership, earnings, dividends and analyst recommendations.

Earnings and Valuation

This table compares Veracyte and Vermillion’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Veracyte $67.97 million 4.04 -$23.99 million ($0.98) -8.28
Vermillion $2.86 million 35.89 -$11.94 million N/A N/A

Vermillion has higher revenue, but lower earnings than Veracyte.

Profitability

This table compares Veracyte and Vermillion’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Veracyte -43.40% -66.79% -34.90%
Vermillion -443.29% -195.68% -118.62%

Insider and Institutional Ownership

63.1% of Veracyte shares are owned by institutional investors. Comparatively, 36.5% of Vermillion shares are owned by institutional investors. 13.4% of Veracyte shares are owned by insiders. Comparatively, 3.7% of Vermillion shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Analyst Recommendations

This is a summary of current ratings and target prices for Veracyte and Vermillion, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Veracyte 0 0 6 0 3.00
Vermillion 0 0 1 0 3.00

Veracyte presently has a consensus target price of $12.40, suggesting a potential upside of 52.90%. Vermillion has a consensus target price of $2.00, suggesting a potential upside of 9.29%. Given Veracyte’s higher probable upside, equities analysts clearly believe Veracyte is more favorable than Vermillion.

Volatility & Risk

Veracyte has a beta of 1.93, meaning that its share price is 93% more volatile than the S&P 500. Comparatively, Vermillion has a beta of 2.4, meaning that its share price is 140% more volatile than the S&P 500.

Summary

Veracyte beats Vermillion on 8 of the 11 factors compared between the two stocks.

About Veracyte

Veracyte, Inc. is a genomic diagnostics company. The Company uses genomic technology to resolve diagnostic ambiguity. It targets diseases in which patients undergo invasive diagnostic procedures. Its products combine genomic technology, clinical science and machine learning. The Company commercializes over three genomic tests, which are transforming the diagnosis of thyroid cancer, lung cancer and idiopathic pulmonary fibrosis. The Company’s commercial solution, the Afirma Thyroid fine needle aspiration (FNA) Analysis, centers on the Afirma Gene Expression Classifier (GEC). The Afirma GEC is offered directly or as part of a solution that also includes cytopathology. The Company operates in the pulmonology diagnostics market. It offers Percepta Bronchial Genomic Classifier, a genomic test to resolve ambiguity in lung cancer diagnosis. It also offers the Envisia Genomic Classifier, which is designed to help in the assessment of patients suspected to have idiopathic pulmonary fibrosis.

About Vermillion

Vermillion, Inc. is a diagnostic service and bio-analytic solutions provider. The Company is engaged in the business of developing and commercializing diagnostic tests for gynecologic disease. It sells OVA1 risk of malignancy test for pelvic mass disease (OVA1). OVA1 is a blood test designed to, in addition to a physician’s clinical assessment of a woman with a pelvic mass, identify women who are at risk of having a malignant ovarian tumor prior to planned surgery. It developed OVA1 through pre-clinical studies in collaboration with various academic medical centers encompassing over 2,500 clinical samples. OVA1 is validated in a multi-center clinical trial encompassing approximately 30 sites reflective of the diverse nature of the clinical centers, at which ovarian adnexal masses are evaluated. Its ASPiRA LABS is a laboratory that provides diagnostic services using a biomarker-based diagnostic algorithm to inform clinical decision making and personalized treatment plans.

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