NVTA - Why Shares of Invitae Soared on Friday
2023-04-21 21:52:11 ET
Shares of Invitae Corporation (NYSE: NVTA) closed 11.57% higher on Friday after Cathie Wood, the CEO of Ark Invest, said the stock was undervalued. Wood's Ark Innovation ETF owns more than 18 million shares of Invitae, worth roughly $24 million as of Friday, so her company has a huge stake in the stock, which has declined more than 74% over the past year and more than 27% so far this year.
Invitae specializes in genetic testing to improve healthcare outcomes. The company finished 2022 with improved revenue, but it had huge losses. The company reported 2022 revenue of $516.3 million, up 12.1%. However, it lost $3.1 billion, or $13.18 in earnings per share (EPS), compared to a loss of $379 million and an EPS loss of $1.80 in 2021. The company also has around $1.6 billion in net debt, so that's a big concern.
The company has begun cost-cutting measures. In the fourth-quarter earnings call, Chief Financial Officer Roxie Wen said the company expects to reduce its cash burn in 2023 to $250 to 275 million in 2023, a more than 45% reduction from the nearly $510 million in cash burn the company had in 2022. Still, the stock presents a lot of risk to investors, with its large debt load. The company did show some progress in the fourth quarter, with its net loss being $99.8 million, compared to a $205 million loss in the same period last year. In the long run, genetic testing has plenty of growth potential. A report by Grand View Research estimates the genetic testing market at $8.8 billion in 2023. It is expected to have a compound annual growth rate of 22% between now and 2030, reaching a $35.34 billion market by that time. The question will be whether Invitae will be around for that growth.
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Why Shares of Invitae Soared on Friday