Veracyte (VCYT) Hits Fresh High: Is There Still Room To Run?

Have you been paying attention to shares of Veracyte (VCYT)? Shares have been on the move with the stock up 15.6% over the past month. The stock hit a new 52-week high of $29.43 in the previous session. Veracyte has gained 125.8% since the start of the year compared to the 8.4% move for the Zacks Medical sector and the 17% return for the Zacks Medical - Instruments industry.

What's Driving the Outperformance?

The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on April 30, 2019, Veracyte reported EPS of $-0.05 versus consensus estimate of $-0.07.

For the current fiscal year, Veracyte is expected to post earnings of $-0.28 per share on $120.17 million in revenues. This represents a 54.84% change in EPS on a 30.61% change in revenues. For the next fiscal year, the company is expected to earn $-0.16 per share on $133.82 million in revenues. This represents a year-over-year change of 41.67% and 11.35%, respectively.

Valuation Metrics

Veracyte may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.

On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.

Veracyte has a Value Score of F. The stock's Growth and Momentum Scores are A and A, respectively, giving the company a VGM Score of B.

Zacks Rank

We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Veracyte currently has a Zacks Rank of #2 (Buy) thanks to favorable earnings estimate revisions from covering analysts.

Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Veracyte fits the bill. Thus, it seems as though Veracyte shares could still be poised for more gains ahead.

How Does Veracyte Stack Up to the Competition?

Shares of Veracyte have been moving higher, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also impressive, including Hologic (HOLX), Integra LifeSciences Holdings (IART), and Tactile Systems Technology (TCMD), all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.

However, it is worth noting that the Zacks Industry Rank for this group is in the bottom half of the ranking, so it isn't all good news for Veracyte. Still, the fundamentals for Veracyte are promising, and it still has potential despite being at a 52-week high.