CareDx, Inc.
CDNA
$87.41
+22.22%
CareDx, Inc. is a precision medicine company focused on the discovery, development, and commercialization of genomics-based diagnostic solutions for transplant patients and caregivers, with a portfolio spanning AlloSure (donor-derived cell-free DNA testing for kidney, heart, and lung transplants), AlloMap (heart transplant gene expression profiling), and supporting lab products and digital tools. The company is the clear commercial leader in non-invasive transplant surveillance in the United States, where it generates the vast majority of its revenue, giving it a distinct first-mover and data-moat identity in a niche but clinically entrenched diagnostics category. The current investor narrative has shifted decisively from turnaround to growth story: a Q2 2026 revenue beat with 52% year-over-year growth and raised full-year guidance, combined with the divestiture of the lower-growth Lab Products division to concentrate on high-margin testing services, has driven a dramatic re-rating of the shares. Debate now centers on the durability of testing volume growth, reimbursement dynamics, and whether the stock's extraordinary run has already discounted the improving fundamentals.…
CDNA
CareDx, Inc.
$87.41
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Investment Opinion: Should I buy CDNA Today?
Rating: Hold. The core thesis is that CareDx has transformed from a stagnant diagnostics name into a genuine growth story with 52.23% revenue growth and expanding margins, but the stock's 326.95% one-year run has already discounted much of the improvement, with the consensus average target of $61.67 sitting 3.6% below the current $64.00. The consensus 'buy' rating (mean 1.57) reflects business momentum rather than near-term price upside, and the wide $46-$75 target range signals meaningful uncertainty.
Supporting evidence is strong on fundamentals: revenue grew 52.23% YoY to $131.95 million in Q2 2026, gross margin expanded to 73.5% from 66.9%, free cash flow TTM is $85.05 million, and the balance sheet holds $374.16 million in cash with debt-to-equity of 0.086. The PS ratio of 2.64x is modest for a 52%-growth diagnostics company, and the PEG of 0.336 suggests the 49.61x forward PE is cheap relative to growth if the earnings inflection is delivered. However, operating margin of just 0.19% and trailing EPS of -$0.02 show the profitability story is nascent, and the forward PE leaves little room for execution error.
The biggest risks that could invalidate the thesis are a deceleration in testing volume growth, reimbursement pressure, and multiple compression from the current 49.61x forward PE. This Hold would upgrade to Buy if the stock pulls back toward the $50-52 support area (implying ~20% downside) or if Q3 2026 results show operating margin expanding above 5% with revenue growth holding above 40%. It would downgrade to Sell if revenue growth decelerates below 30% or if gross margin falls below 70%. On valuation, the stock is fairly valued to slightly overvalued relative to its own history and analyst targets, but attractive on a growth-adjusted basis if the earnings inflection materializes.
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CDNA 12-Month Price Forecast
The forward view is balanced: the fundamental momentum is real and accelerating, with 52.23% revenue growth, 73.5% gross margin, and $85.05 million TTM free cash flow, but the stock's 326.95% one-year run has already priced in much of the improvement. The average analyst target of $61.67 sitting below the current $64.00 and the 49.61x forward PE leave limited near-term upside, while the 2.383 beta and -23.64% max drawdown warn of sharp corrections. I would upgrade to bullish if Q3 2026 shows operating margin above 5% with revenue growth holding above 40%, or if the stock pulls back toward the $50-52 support area. I would downgrade to bearish if revenue growth decelerates below 30% or if reimbursement pressure emerges, which would compress the multiple toward the $46 analyst low target.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on CareDx, Inc.'s 12-month outlook, with a consensus price target around $65.33 and implied upside of -25.3% versus the current price.
Average Target
$65.33
0 analysts
Implied Upside
-25.3%
vs. current price
Analyst Count
—
covering this stock
Price Range
$46 - $81
Analyst target range
Six analysts cover CareDx with a consensus recommendation of "buy" (mean rating of 1.57 on a 1-5 scale where 1 is strong buy), and the average price target of $61.67 sits slightly below the current $64.00 price, implying roughly -3.6% downside to consensus — a notable signal that after the stock's 327% one-year run, the shares have overshot the average analyst's fair value estimate. The consensus therefore leans bullish on fundamentals but cautious on valuation, with the recommendation strength reflecting business momentum rather than near-term price upside. Institutional ratings show a stable pattern: BTIG has reiterated Buy repeatedly (most recently September 24, 2026, and August 6, 2026), while HC Wainwright and Wells Fargo maintain Neutral/Equal Weight stances, indicating a split between growth-oriented bulls and valuation-conscious holdouts. The target range spans $46.00 to $75.00, a wide ~63% spread that signals meaningful uncertainty about the trajectory. The high target of $75.00 (about 17.2% above the current price) likely assumes continued 50%+ testing revenue growth, further margin expansion toward the mid-70s gross margin, and multiple expansion as the earnings inflection is proven; the low target of $46.00 (about 28.1% below current) prices in decelerating growth, reimbursement pressure, or a reversion to the pre-breakout valuation. The wide dispersion, combined with the average target sitting below the current price, suggests the stock is in price-discovery mode and that near-term upside may be limited even as the fundamental story remains intact.
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Bulls vs Bears: CDNA Investment Factors
The bull case currently has stronger evidence: revenue is accelerating at 52.23% YoY, gross margin expanded to 73.5%, free cash flow is $85.05 million TTM, and the balance sheet holds $374.16 million in cash with minimal debt. However, the bear case is not without merit—the average analyst target of $61.67 sits below the current $64.00, operating margin is a razor-thin 0.19%, and the forward PE of 49.61x prices in flawless execution. The single most important tension is whether the 52% testing growth is durable and can convert into sustainable operating leverage; if it can, the earnings inflection justifies the multiple, but if growth decelerates, the stock's 2.383 beta and 85.7% range positioning leave substantial downside.
Bullish
- Revenue accelerating at 52% YoY: Q2 2026 revenue reached $131.95 million, up 52.23% from $86.68 million in Q2 2025, marking the fastest growth in the dataset and a clear acceleration from Q1's ~39% pace. This services-led inflection (Service revenue $99.93 million vs. Product $12.79 million) demonstrates that the core transplant testing franchise is gaining share and scaling rapidly.
- Gross margin expansion to 73.5%: Gross margin rose to 73.5% in Q2 2026 from 66.9% a year earlier and 67.2% in Q4 2025, reflecting favorable testing mix and operating leverage. This 660-basis-point improvement is a genuine margin story, not an accounting artifact, and supports the path to sustained profitability.
- Fortress balance sheet with $374M cash: Cash stood at $374.16 million at the end of Q2 2026 versus $78.47 million at the start of the quarter, boosted by divestiture proceeds, with debt-to-equity of only 0.086 and a current ratio of 2.86. Free cash flow TTM of $85.05 million and Q2 FCF of $28.75 million on just $1.86 million capex confirm a capital-light, self-funding model.
- Analyst consensus buy with high target $75: Six analysts rate the stock a consensus 'buy' (mean 1.57), and the high target of $75.00 implies 17.2% upside from $64.00. BTIG has repeatedly reiterated Buy, and the wide $46-$75 target range reflects a market still discovering the earnings inflection.
Bearish
- Average analyst target below current price: The consensus average target of $61.67 sits 3.6% below the current $64.00, a clear signal that after a 326.95% one-year run the shares have overshot the average analyst's fair value. The low target of $46.00 implies 28.1% downside, underscoring valuation risk.
- Operating margin barely positive at 0.19%: Q2 2026 operating income was just $257,000 (0.19% margin), and the reported 83.8% net margin is inflated by a $114.26 million non-operating other-income item, likely the Lab Products divestiture gain. Trailing operating margin remains -6.60% and EPS -$0.02, so the underlying business is only just crossing into profitability.
- Extreme volatility with beta of 2.383: The stock's beta of 2.383 means it is roughly 138% more volatile than the market, and the -23.64% max drawdown illustrates how quickly it can correct. A -4.01% single-session pullback from $66.675 to $64.00 shows the fragility of momentum at these levels.
- Forward PE of 49.61x leaves no room for error: The market is pricing a dramatic earnings recovery, with forward PE at 49.61x versus a negative trailing PE of -47.10x. Any deceleration in testing volume growth or reimbursement pressure would compress this multiple sharply, especially with the stock at 85.7% of its 52-week range.
CDNA Technical Analysis
CareDx is in a powerful, sustained uptrend that has produced a 326.95% one-year gain and a 234.38% year-to-date advance, with the current price of $64.00 sitting at roughly 85.7% of its 52-week range (low of $14.03, high of $72.51). That positioning near the upper end of the range signals strong momentum but also meaningful overextension risk after a move of this magnitude; the stock has more than quadrupled off its lows. The 52-week high of $72.51 remains about 13.3% above the current price, leaving room to run but also marking a clear ceiling where sellers previously emerged. Short-term momentum remains firmly positive but is decelerating from its peak: the 1-month change of +19.51% and 3-month change of +61.09% confirm acceleration versus the 6-month +198.79% and 1-year +326.95% figures, though the most recent session saw a -4.01% pullback from the $66.675 previous close. Relative strength versus the S&P 500 is extraordinary across every window (+18.29% over 1 month, +58.40% over 3 months, +311.42% over 1 year), underscoring that this is idiosyncratic, company-specific outperformance rather than a beta-driven move. The stock's beta of 2.383 means it is roughly 138% more volatile than the market, which amplifies both the upside momentum and the risk of sharp drawdowns; the -23.64% max drawdown figure illustrates how quickly this name can correct. Key support sits at the 52-week low of $14.03, with intermediate support likely around the $50-52 area where the stock consolidated in August and September; resistance is the $72.51 high, and a breakout above that level would signal a fresh leg higher, while a failure and breakdown below $50 would suggest the momentum trade is unwinding. With a short ratio of 5.19 days-to-cover, there is a meaningful short interest that can fuel squeezes on strength but also adds volatility on weakness.
Beta
2.38
2.38x market volatility
Max Drawdown
-23.6%
Largest decline past year
52-Week Range
$14-$91
Price range past year
Annual Return
+504.1%
Cumulative gain past year
| Period | CDNA Return | S&P 500 |
|---|---|---|
| 1m | +34.5% | -0.9% |
| 3m | +100.0% | +1.2% |
| 6m | +306.6% | +4.9% |
| 1y | +504.1% | +11.2% |
| ytd | +356.7% | +10.8% |
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CDNA Fundamental Analysis
Revenue is inflecting sharply upward: Q2 2026 revenue reached $131.95 million, up 52.23% year-over-year from $86.68 million in Q2 2025, and up sequentially from $117.70 million in Q1 2026 and $108.39 million in Q4 2025. The multi-quarter trajectory shows clear acceleration — Q1 2026 grew roughly 39% over Q1 2025's $84.69 million, and Q2's 52% growth marks the fastest pace in the dataset, driven overwhelmingly by the Service segment at $99.93 million versus Product at $12.79 million. This services-led mix (testing) is the high-margin core the company is now doubling down on after agreeing to sell its lower-growth Lab Products division, and the raised full-year guidance implies management expects the momentum to persist. The growth trend materially strengthens the investment case, shifting CareDx from a stagnant post-COVID diagnostics name into a genuine share-gainer in transplant surveillance. Profitability has swung decisively positive: Q2 2026 net income was $110.64 million with a reported net margin of 83.8%, though this is heavily inflated by a $114.26 million non-operating other-income item (likely a gain on the Lab Products divestiture), so operating income of just $257,000 (0.19% operating margin) is the cleaner read. Gross margin expanded to 73.5% in Q2 2026 from 66.9% in Q2 2025 and 67.2% in Q4 2025, a genuine and meaningful improvement reflecting favorable testing mix and cost leverage. On a trailing basis the company still shows a net margin of -5.62% and operating margin of -6.60%, and EPS of -$0.02, so the underlying business is only just crossing into profitability — but the direction of travel (from -$10.35 million net income in Q1 2025 to +$2.81 million in Q1 2026 to the Q2 blowout) is unmistakably toward sustained positive earnings. The balance sheet is fortress-like: debt-to-equity of just 0.086, a current ratio of 2.86, and $374.16 million in cash at the end of Q2 2026 versus $78.47 million at the start of the quarter, boosted by divestiture proceeds. Free cash flow TTM is $85.05 million, with Q2 2026 free cash flow of $28.75 million on operating cash flow of $30.60 million and capex of only $1.86 million — a capital-light model generating ample internal funding. ROE of -7.05% and ROA of -0.25% remain negative on a trailing basis but are rapidly improving, and with essentially no debt and a large cash pile, CareDx carries minimal financial risk and no dependence on external financing.
Quarterly Revenue
$131948000.0B
2026-06
Revenue YoY Growth
+52.2%
YoY Comparison
Gross Margin
73.5%
Latest Quarter
Free Cash Flow
$85046000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is CDNA Overvalued?
Because trailing net income is negative (EPS of -$0.02, trailing PE of -47.10x), the PE ratio is not a meaningful primary metric; instead the PS ratio of 2.64x is the appropriate anchor, supplemented by the forward PE of 49.61x, which reflects the market's expectation that earnings are about to inflect sharply positive. The gap between the negative trailing PE and the 49.61x forward PE is enormous and tells the story: the market is pricing in a dramatic earnings recovery, consistent with consensus EPS estimates of $2.74 for the forward period and estimated revenue of $807.4 million. The PEG ratio of 0.336 suggests that, if the growth materializes, the forward multiple is cheap relative to the growth rate. On a peer basis, the PS ratio of 2.64x is modest for a diagnostics company growing revenue at 52%, and the EV/Sales of 6.76x is elevated but defensible given the growth and margin expansion; the gross margin of 67.6% and improving operating leverage compare favorably with typical medical diagnostics peers. The EV/EBITDA of -207.24x is distorted by near-zero trailing EBITDA and should be disregarded. Relative to its own history, the stock's PS multiple has compressed dramatically from 11.12x in Q2 2026 and 8.89x in Q4 2025 to the current 2.64x, even as the share price has soared — a direct consequence of revenue growth outpacing the price move and the market cap figure of roughly $1.0 billion in the key metrics versus the $3.31 billion company-identity figure (a data inconsistency worth flagging). The PB ratio of 3.31x sits near the middle of its historical 2.08x-6.05x band, suggesting the stock is not stretched on an asset basis. Net-net, valuation looks reasonable-to-attractive on a growth-adjusted basis if the earnings inflection is delivered, but the forward PE of 49.61x leaves little room for execution error.
PE
-47.1x
Latest Quarter
vs. Historical
Low-End
5-Year PE Range 3x~114x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
-207.2x
Enterprise Value Multiple
Investment Risk Disclosure
Financial and operational risks center on the gap between reported and underlying profitability. Q2 2026 net income of $110.64 million was inflated by a $114.26 million non-operating other-income item, likely the Lab Products divestiture gain, while operating income was only $257,000 (0.19% margin). Trailing operating margin is -6.60% and EPS -$0.02, so the business is only just crossing into profitability, and revenue is heavily concentrated in US testing services ($99.93 million of $131.95 million in Q2). Any slowdown in testing volume growth or a shift in payer mix could quickly erase the thin operating profit, and the company's dependence on continued 50%+ growth to justify a 49.61x forward PE amplifies earnings volatility.
Market and competitive risks are elevated by the stock's extreme valuation and momentum positioning. The beta of 2.383 means the shares are roughly 138% more volatile than the market, and the -23.64% max drawdown shows how sharply it can correct. At $64.00, the stock sits at 85.7% of its 52-week range (low $14.03, high $72.51) after a 326.95% one-year gain, leaving little margin for error. The average analyst target of $61.67 is below the current price, and the wide $46-$75 target range signals disagreement about fair value. Competitive disruption in transplant surveillance, reimbursement pressure, or a sector rotation away from high-multiple diagnostics names could trigger multiple compression, especially with a short ratio of 5.19 days-to-cover adding volatility on weakness.
Worst-case scenario: a deceleration in testing volume growth combined with reimbursement pressure would compress the forward PE from 49.61x toward the low-target valuation. The analyst low target of $46.00 implies a 28.1% decline from $64.00, and a reversion toward the 52-week low of $14.03 would represent a 78.1% loss, though that extreme is unlikely without a fundamental breakdown. A more realistic adverse path—growth slowing to 20-30% and the multiple compressing to 30x forward earnings—could take the stock to the $46-$50 area, a 22-28% drawdown. Given the 2.383 beta and -23.64% historical max drawdown, investors should be prepared for a 25-30% correction even in a base-case scenario.
FAQ
The most severe risk is valuation compression: the forward PE of 49.61x leaves no room for error, and any deceleration in testing volume growth could drive the multiple toward the analyst low target of $46.00 (28.1% downside). Second is profitability risk: operating margin is just 0.19%, and the reported 83.8% net margin is inflated by a $114.26 million non-operating item, so the underlying business is only just crossing into profitability. Third is market volatility: the beta of 2.383 means the stock is roughly 138% more volatile than the market, and the -23.64% max drawdown shows how sharply it can correct, amplified by a short ratio of 5.19 days-to-cover. Fourth is revenue concentration: the vast majority of revenue comes from US transplant testing services, exposing the company to reimbursement policy changes and competitive disruption in a single niche market.
The 12-month forecast has three scenarios: a bull case (25% probability) targeting $72.51-$75.00, a base case (50% probability) targeting $55-$65, and a bear case (25% probability) targeting $46-$52. The base case is most likely, assuming revenue growth moderates to 35-45%, gross margin holds in the low-70s, and operating margin improves to 2-4%, with the stock consolidating around the analyst average target of $61.67. The bull case requires 50%+ growth and operating margin above 5%, while the bear case assumes growth decelerating below 30% and multiple compression toward 30x forward earnings. The key assumption behind the base case is that the 52% testing growth is durable but normalizes as the post-divestiture base annualizes.
CDNA is fairly valued to slightly overvalued on near-term metrics but attractive on a growth-adjusted basis. The trailing PE is negative (-47.10x) due to a -$0.02 EPS, so the PS ratio of 2.64x is the primary anchor, which is modest for a diagnostics company growing revenue at 52%. However, the forward PE of 49.61x prices in a dramatic earnings recovery to $2.74 EPS, and the EV/Sales of 6.76x is elevated. The PEG ratio of 0.336 suggests the multiple is cheap relative to growth if the inflection is delivered, but the average analyst target of $61.67 sitting below the current $64.00 signals the market has already priced in much of the improvement. Relative to its own history, the PS multiple has compressed from 11.12x in Q2 2026 to 2.64x, even as the share price soared, reflecting revenue growth outpacing the price move.
From a risk/reward perspective, CDNA is a mixed proposition. The bull case is supported by 52.23% revenue growth, 73.5% gross margin, $85.05 million TTM free cash flow, and a fortress balance sheet with $374.16 million in cash, while the consensus analyst rating is 'buy' with a high target of $75.00 (17.2% upside). However, the average target of $61.67 sits 3.6% below the current $64.00, and the forward PE of 49.61x leaves little room for error, with the low target of $46.00 implying 28.1% downside. The stock's 2.383 beta and -23.64% max drawdown mean investors must tolerate sharp corrections. It is a good buy for growth-oriented investors with a high risk tolerance who can hold through volatility and believe the 52% testing growth is durable, but valuation-conscious investors may prefer to wait for a pullback toward the $50-52 support area.
CDNA is better suited for medium-to-long-term investment (minimum 12-18 months) than short-term trading, given its 2.383 beta, -23.64% max drawdown, and the need for the earnings inflection to be proven over multiple quarters. The company pays no dividend (payout ratio 0, yield 0), so returns depend entirely on capital appreciation, and the forward PE of 49.61x means near-term volatility is likely as the market digests quarterly results. Short-term traders could exploit the momentum (1-month +19.51%, 3-month +61.09%) but face sharp reversal risk, as shown by the -4.01% single-session pullback. A suggested minimum holding period of 12-18 months allows time for Q3 and Q4 2026 results to validate the 52% growth trajectory and for operating margin to expand toward 5%, which would support the valuation.