GeneDx Holdings Corp. (NASDAQ: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. (NASDAQ:CRBP) and Root, Inc. (NASDAQ: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. (NASDAQ:ELEV), up %411%.
- Dave Inc. (NASDAQ:DAVE), up 403%.
- Avidity Biosciences, Inc. (NASDAQ:RNA), up 387%.
- Sezzle Inc. (NASDAQ:SEZL), up 322%.
- Candel Therapeutics, Inc. (NASDAQ:CADL), up 321%.
- NuScale Power Corporation (NYSE:SMR), up 303%.
- Janux Therapeutices, Inc. (NASDAQ:JANX), up 302%.
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