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Why Invitae Stock Rose 10.7% on Tuesday

By Jim Halley - Mar 22, 2022 at 2:50PM

Key Points

  • Invitae grew revenue by 65% in 2021.
  • The company also had an earnings-per-share loss of $1.80 last year.
  • The stock nearly rose $1 a share on Tuesday.

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The molecular diagnostics company is bouncing back from its two-year low.

What happened

Shares of molecular diagnostics company Invitae (NVTA 19.07%) climbed 10.7% on Tuesday. The company closed at $7.96 on Monday, then, after opening at $7.90 on Tuesday, climbed as high as $8.81 shortly after 11 a.m. ET. The stock is down more than 43% this year and it has a 52-week low of $6.06 and a 52-week high of $42.72.

So what

The company didn't release any news on Monday, but its stock has been steadily climbing over the past week since it fell to $6.06 on March 15. At this point, investors may be more willing to take a flyer on Invitae, especially since Cathie Wood, the CEO for the Ark Invest family of exchange-traded funds (ETFs), has an interest in the stock. It is the No. 23 holding in Wood's Ark Innovation ETF with 18,959,702 shares.

A healthcare worker uses a computer in a hospital.

Image source: Getty Images.

The recent trend in the markets away from tech stocks has impacted Invitae and may weigh on its shares for some time. The company, while it has had great revenue growth, has yet to turn a profit. Invitae, with its low share price and relatively small market cap ($1.82 billion), is likely to be volatile.

Now what

The biotech company has the potential to be a disruptor in the healthcare industry, with its concept of personalized medicine, based on genomic testing. It has had consistent double-digit revenue growth, including a 65% jump, year over year, to $460 million in 2021, with the largest of that, $280 million, coming from oncology screening.

The big question, as with so many biotech stocks, is when will Invitae turn a profit? It posted an earnings per share (EPS) loss of $1.80 in 2021, which was an improvement from the EPS loss of $4.47 it posted in 2020. The company predicts 40% growth in revenue in 2022, to $640 million, but still expected a cash burn of $200 million. As long as the company continues to have momentum, it appears to be a good long-term stock, albeit with risk. The company reported billable volume of 1.17 million in 2021, up 77% year over year with active healthcare provider accounts up to 18,458, more than twice what they were in 2020. Invitae CEO Sean George, in the company's fourth-quarter earnings call, pointed out that better genetic information will be a catalyst for better clinical decisions in the future and Invitae has an early-adopter advantage in that space.

Jim Halley has no position in any of the stocks mentioned. The Motley Fool owns and recommends Invitae. The Motley Fool has a disclosure policy.

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