GeneDx Leads Russell 2000 This Year As It Shifts To More Comprehensive Genetic Testing

GeneDx Holdings Corp. WGS has made the biggest gains on the Russell 2000 Index in 2024 as the biotechnology company moves toward more comprehensive genetic testing.

The Maryland-based company’s shares have soared 1,101% so far this year as of midday Thursday, according to Tradingview.

Goldman Sachs analyst Matthew Sykes attributes much of GeneDX’s positive momentum to shifting its testing. The company went from panel-based tests, which look for variants in more than one gene, to exome/genome testing, which analyzes the bulk of a person’s DNA to find genetic variations.

Also Read: GeneDx Stock Climbs After Better-Than-Expected Q1 Results, Raises FY24 Guidance

“We remain optimistic about WGS's continued focus on converting its mix shift of panel-based tests to whole exome/genome-based tests,” Sykes wrote in a note on Wednesday.

“As of 1Q24, 30% of their tests were exome/genome-based, whereas this metric was 16% in 1Q23.”

He said the transition has expanded the company’s margins from 33% in the first quarter of 2023 to 61% in this year’s first quarter.

“We see gross margins continuing to improve going forward, yet see more moderated growth in out years, reaching the mid-high 60% range exiting 2026,” he wrote.

“We see this mix shift evolution as the key driver of WGS's growth in the near term given their initial focus on rare disease/pediatrics.”

Goldman Sachs maintains revenue estimates for GeneDx at $243 million for 2024, $269 million for 2025 and $306 million for 2026. It expects the company to post losses per share of $1.07 for this year and $0.21 for next year and earnings per share of $0.35 for 2026.

It has given GeneDx a Neutral rating and has increased its price target on the stock from $12.50 to $28.

Analysts expect GeneDx to post a $0.30 loss per share when it reports second-quarter earnings on July 30, up from a $0.33 loss per share registered for the first quarter, according to Benzinga Pro.

GeneDx has distanced itself from stocks held by runner-up small-cap companies Massachusetts-based Corbus Holdings Inc. CRBP and Root, Inc. ROOT.

Corbus has risen 834% since the beginning of 2024, while Root, an Ohio-based online car insurance company, has gained 670%.

Price Action: GeneDx has slipped 3.36% to $32.18 by Thursday’s midday trading, while Corbus has fallen 5.26% to $55.86 and Root has risen 1.49% to $80.59.

Other leading small-cap stocks on Russell 2000

Below are the remaining companies that round out the top-10 list of top performers in the Russell 2000.

• Elevation Oncology Inc. ELEV, up %411%.
• Dave Inc. DAVE, up 403%.
• Avidity Biosciences, Inc. RNA, up 387%.
• Sezzle Inc. SEZL, up 322%.
• Candel Therapeutics, Inc. CADL, up 321%.
• NuScale Power Corporation SMR, up 303%.
• Janux Therapeutices, Inc. JANX, up 302%.

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