Diagnostics company CareDx hits a 5-year high after TP upgrade from BTIG

Shares of CareDx, a mid-cap company making diagnostic tests, soared 13% on Thursday to a five-year high. The rally came after investment bank BTIG raised its target price for the stock by 23%. The market still values CareDx as a niche transplant-testing business, but its acquisition of cancer-test maker Naveris has provided a new growth driver.

CareDx gained 13% on the Nasdaq on Thursday to $61.40 per share, its best close since November 2021. The rally began after BTIG raised its target price for the stock by 23% to $74 per share while maintaining a “buy” rating. The new target implies 20.5% upside from the last close.

BTIG upgraded its valuation after hosting CareDx investor meetings, Investing.com reports. During the meetings, the management expressed confidence in strong growth in the company’s core transplant-testing business. One CareDx product, AlloSure, detects donor-derived DNA in a patient’s blood to help identify rejection of a transplanted heart, kidney, or lung. Another, AlloMap, measures immune-system activity to assess whether it is attacking a transplanted heart. Meanwhile, Medicare, the U.S. government-run healthcare service for the elderly, confirmed coverage for all of the company’s transplant surveillance tests following a change in policy that took effect in August.

The management was also upbeat about the development of new business lines, including oncology. CareDx has its own AI-powered test in development, AlloHeme, designed to predict the risk of relapse following cell therapy for cancer. In addition, the company acquired Naveris in July. Naveris has developed the only Medicare-covered blood test for detecting molecular residual disease after treatment of HPV-driven head and neck and anal cancers.

However, the market values CareDx as a niche transplant-testing business rather than a company with operations that also include oncology, TIKR argues. BTIG notes that CareDx trades at 5.1 times Wall Street’s 2026 revenue estimates. Specialty laboratories, meanwhile, trade at an average of 12.9 times revenue estimates, while oncology diagnostics companies trade at 15.0-19.0 times. CareDx stock has substantial upside if the market begins to value both sides of its business, TIKR reckons.

CareDx stock has soared almost 226% year to date. It has five “buy” ratings from Wall Street analysts, versus three “hold” calls, according to MarketWatch data. The average target price of $56.14 per share is almost 9% below the last close.