Investing.com -- Wells Fargo upgraded Caredx Inc (NASDAQ:CDNA) to "Equal Weight" from "Underweight" given a more balanced risk/reward profile after a roughly 30% decline in the stock since late August, contrasting sharply with a 17% average gain for peers during the same period.
CareDx’s valuation has dropped significantly, with its enterprise value-to-2025 revenue multiple declining to 2.7x from 4.5x in August, now trading at a 33% discount to peers. Wells Fargo (NYSE:WFC) set a price target of $24.
The brokerage noted that its previous cautious stance was driven by high investor expectations and stretched valuation following a series of positives, including the appointment of a new CEO, multiple earnings beats, and the removal of restrictive CMS billing changes.
Company’s growth is expected to stem from increased transplant procedures, broader adoption of its products, higher patient compliance, and advancements in its pipeline. The company aims to raise adjusted EBITDA margins.
For 2025, CareDx guided to $370 million in revenue, representing an 11% year-over-year growth, aligning with prior commentary for low-teen growth. Wells Fargo highlighted several drivers, including expanded commercial teams, payer wins, and the CMS launch of the IOTA program to support kidney transplants.
The brokerage expressed confidence in CareDx’s revamped leadership team, which has recently welcomed seasoned executives from companies such as Veracyte (NASDAQ:VCYT) and Genentech, alongside a reorganization aimed at boosting operational efficiency.
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