Vermillion (NASDAQ: VRML) and Veracyte (NASDAQ:VCYT) are both small-cap medical companies, but which is the better stock? We will compare the two companies based on the strength of their dividends, earnings, analyst recommendations, risk, profitabiliy, valuation and institutional ownership.

Risk and Volatility

Vermillion has a beta of 2.37, suggesting that its stock price is 137% more volatile than the S&P 500. Comparatively, Veracyte has a beta of 1.91, suggesting that its stock price is 91% more volatile than the S&P 500.

Valuation and Earnings

This table compares Vermillion and Veracyte’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Vermillion $2.86 million 27.65 -$11.94 million N/A N/A
Veracyte $71.70 million 3.91 -$20.10 million ($0.80) -10.34

Vermillion has higher revenue, but lower earnings than Veracyte.

Institutional & Insider Ownership

36.4% of Vermillion shares are owned by institutional investors. Comparatively, 63.2% of Veracyte shares are owned by institutional investors. 3.7% of Vermillion shares are owned by insiders. Comparatively, 13.4% of Veracyte shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Profitability

This table compares Vermillion and Veracyte’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Vermillion -443.29% -195.68% -118.62%
Veracyte -35.64% -53.58% -29.07%

Analyst Recommendations

This is a summary of recent recommendations and price targets for Vermillion and Veracyte, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Vermillion 0 0 1 0 3.00
Veracyte 0 0 5 0 3.00

Vermillion presently has a consensus target price of $2.00, suggesting a potential upside of 41.84%. Veracyte has a consensus target price of $13.00, suggesting a potential upside of 57.19%. Given Veracyte’s higher possible upside, analysts clearly believe Veracyte is more favorable than Vermillion.

Summary

Veracyte beats Vermillion on 8 of the 11 factors compared between the two stocks.

Vermillion Company Profile

Vermillion, Inc. is a diagnostic service and bio-analytic solutions provider. The Company is engaged in the business of developing and commercializing diagnostic tests for gynecologic disease. It sells OVA1 risk of malignancy test for pelvic mass disease (OVA1). OVA1 is a blood test designed to, in addition to a physician’s clinical assessment of a woman with a pelvic mass, identify women who are at risk of having a malignant ovarian tumor prior to planned surgery. It developed OVA1 through pre-clinical studies in collaboration with various academic medical centers encompassing over 2,500 clinical samples. OVA1 is validated in a multi-center clinical trial encompassing approximately 30 sites reflective of the diverse nature of the clinical centers, at which ovarian adnexal masses are evaluated. Its ASPiRA LABS is a laboratory that provides diagnostic services using a biomarker-based diagnostic algorithm to inform clinical decision making and personalized treatment plans.

Veracyte Company Profile

Veracyte, Inc. is a genomic diagnostics company. The Company uses genomic technology to resolve diagnostic ambiguity. It targets diseases in which patients undergo invasive diagnostic procedures. Its products combine genomic technology, clinical science and machine learning. The Company commercializes over three genomic tests, which are transforming the diagnosis of thyroid cancer, lung cancer and idiopathic pulmonary fibrosis. The Company’s commercial solution, the Afirma Thyroid fine needle aspiration (FNA) Analysis, centers on the Afirma Gene Expression Classifier (GEC). The Afirma GEC is offered directly or as part of a solution that also includes cytopathology. The Company operates in the pulmonology diagnostics market. It offers Percepta Bronchial Genomic Classifier, a genomic test to resolve ambiguity in lung cancer diagnosis. It also offers the Envisia Genomic Classifier, which is designed to help in the assessment of patients suspected to have idiopathic pulmonary fibrosis.

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