On Wednesday, Needham maintained a Buy rating on OncoCyte Corp (NASDAQ:OCX), while increasing the price target to $4.25 from the previous $3.60. This adjustment follows OncoCyte's fourth-quarter results, which were announced on April 12, 2024.
The company reported revenues that exceeded consensus estimates despite a year-over-year decrease of 72%. This decline was attributed to the sale of a majority stake in DetermaRx, although this was partially offset by a 5% year-over-year increase in Pharmaceutical Services revenue.
The company has been actively working on reducing its quarterly cash burn and expects it to remain below $5 million. In a recent development, OncoCyte announced a significant partnership with Bio-Rad Laboratories (NYSE:BIO) to commercialize its GraftAssure tests. This partnership includes an immediate $3.5 million equity investment and the possibility of an additional $7.5 million in milestone equity investments.
The collaboration with Bio-Rad Laboratories is part of a broader private placement that resulted in $15.8 million in gross proceeds. According to the analyst, the funds raised should provide OncoCyte with sufficient capital to continue operations through the middle of 2025. The increased price target reflects a valuation based on the firm's 2025 estimated revenue for OncoCyte.
InvestingPro Insights
OncoCyte Corp's (NASDAQ:OCX) financial stability is highlighted by the fact that it holds more cash than debt on its balance sheet, which is an encouraging sign for investors seeking a company with a solid liquidity position. This is supported by an InvestingPro Tip that notes the company's ability to maintain a higher level of cash compared to its debt. However, it's important to consider that analysts have raised concerns about the company's cash burn rate and do not expect it to be profitable this year. This is emphasized by another InvestingPro Tip pointing out OncoCyte's rapid cash consumption and the lack of profitability over the last twelve months.
From the latest real-time data on InvestingPro, OncoCyte's market capitalization stands at $19.86 million, reflecting the current investor valuation of the company. The revenue growth for the last twelve months as of Q4 2023 is a robust 56.89%, which is a strong indicator of OncoCyte's capacity to increase its sales. Despite this growth, the company's operating income margin for the same period is notably negative at -1520.83%, illustrating the challenges it faces in translating revenue into operational profitability.
Investors interested in a deeper analysis can find additional InvestingPro Tips for OncoCyte at https://www.investing.com/pro/OCX. For those looking to enhance their investment strategy with comprehensive data and insights, InvestingPro offers an extensive range of tools and analytics. Take advantage of a special offer with the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, where you can discover even more tips to inform your investment decisions.
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