VCYT · Veracyte
Conviction · Low · more likely to lag the S&P 500 over the next three months
Wrong if: a daily close above $28.37
Note written ·
Price against the kill line
14.2% clear of its kill line on the 13 November 2026 close.
How to read this
This note expects the shares to lag the market, so its kill line sits above the price: a close above the red mark would prove the view wrong. Prices run from low on the left to high on the right. The dot is where the stock closed on 13 November 2026, left of the mark while it is below the line; a dot right of the mark has closed through it.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close above $28.37, on record since 11 November 2026. The shares are down 42.2% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close above $28.37, 13% above the last close (11 November 2026), would show the shares leading the S&P 500 and prove this call wrong.
Research onlyNot in the portfolio.
Key figures from the filings · Health Care
Quarter to 30 September 2026, filed 5 November 2026; valuation at the 13 November 2026 close
- Revenue, latest quarter ($M)
- 152
- Revenue, change on a year (%)
- +15.1
- Gross margin (%)
- 70.6
- Operating margin (%)
- 10.9
- Free cash flow, four quarters ($M)
- 162
- Net cash, cash less debt ($M)
- 200
- Price to earnings (×)
- 15.5
- Enterprise value to sales (×)
- 3.0
All filed numbers
What Veracyte reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Gross margin (%) | Operating margin (%) |
|---|---|---|---|---|
| first filed | 152 | +15.1 | 70.6 | 10.9 |
| first filed | 150 | +15.5 | 72.2 | 15.3 |
| first filed | 139 | +21.5 | 72.7 | 16.3 |
| first filed | 141 | +18.5 | 72.5 | 26.4 |
| first filed | 132 | +13.8 | 69.2 | 17.4 |
| first filed | 130 | +13.8 | 69.0 | −4.0 |
| Pre-tax income ($M) | 21.1 |
| Net income ($M) four quarters: 127 | 31.5 |
| Diluted shares, change on a year (%) against the quarter to 30 September 2025 | +3.9 |
| Operating cash flow ($M) | 174 |
| Capital spending ($M) | 11.9 |
| Free cash flow ($M) | 162 |
| Cash and short-term investments ($M) | 200 |
| Debt ($M) | None reported |
| Net cash, cash less debt ($M) no debt reported | 200 |
| Deferred revenue ($M) +107.2% on a year | 0.9 |
| Backlog, orders not yet delivered ($M) | Not reported |
| Receivables ($M) | 56.8 |
| Inventory ($M) at 31 December 2025, filed 26 February 2026 | 20.5 |
| Shareholders' equity ($M) | 1,433 |
| Market value ($M) | 1,963 |
| Enterprise value, market value plus net debt ($M) no debt reported | 1,764 |
| Enterprise value to sales (×) no debt reported | 3.0 |
| Enterprise value to operating income (×) no debt reported | 17.7 |
| Price to earnings (×) | 15.5 |
| Price to book value (×) | 1.4 |
| Free-cash-flow yield (%) | 8.2 |
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): 12.2% of shares outstanding sold short, 8.5 days of average trading to cover, −3.5% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $0 | $2.9M |
| 12 monthsfrom | $0 | $19.2M |
The thesis
Veracyte's genomic test business is still profitable, but its 4 November 2026 third-quarter report broke the Decipher prostate growth story. Decipher revenue grew 12% against 20% in Q2, and the 2027 preview points to mid-single-digit revenue growth. The fourth-quarter report, expected around February 2027, decides whether Decipher volume has stopped slowing.
The adjusted close was $24.06 on 10 November 2026. The shares closed at $52.52 on 4 November 2026, before the after-market release. The 14-day relative strength index (a 0–100 momentum gauge) is 25.5, and the three-month price change is −43.5%. The Decipher growth narrative is dead for now: the 4 November 2026 report removed the premise that growth would hold near 20%, and five brokers have cut targets since.
What remains is a business with $370.5 million of cash and investments, a $100 million buyback and a 27.2% adjusted EBITDA margin in the quarter. Whether that is enough to beat the S&P 500 over three months is unclear, and the evidence supports coverage with a low rating.
Bullish and bearish views on Veracyte, Inc.
The bull case on Veracyte, Inc. (VCYT), in brief: profitability survives the reset. The bear case: Decipher volume missed plan.
Bull case
- Profitability survives the reset. Third-quarter revenue was $151.8 million, up 15%. GAAP net income was $31.5 million and adjusted EBITDA was $41.2 million, a 27.2% margin (company release, 4 November 2026). Full-year adjusted EBITDA margin guidance above 26% was unchanged.
- Afirma is offsetting part of the gap. Afirma revenue was $51.5 million, up 19% on about 19,100 tests, and management raised its 2026 Afirma growth outlook to about 16% from 12–14% (company release, 4 November 2026).
- The balance sheet funds a buyback. Cash and short-term investments were $370.5 million at quarter end, with $40.3 million of operating cash flow in the quarter. The board authorised repurchases of up to $100 million over 12 months (company release, 4 November 2026).
- The shares trade under every cited target. Needham's target is $46 (Buy, 5 November 2026), Freedom Capital Markets' $40 (Buy, 10 November 2026), UBS's $35 (Buy, 9 November 2026), Leerink Partners' $35 (Market Perform, 5 November 2026) and Piper Sandler's $30 (Overweight, 10 November 2026). The $24.06 close of 10 November 2026 is below all five.
- Clinical evidence for Decipher keeps building. The 23 October 2026 STAMPEDE analysis and the 29 September 2026 NRG/RTOG 0815 analysis both support Decipher's use in treatment selection (company releases).
Bear case
- Decipher volume missed plan. The test ran at about 29,900 tests, roughly 1,000 below management's plan of about 31,000, and revenue grew 12% (company release, 4 November 2026). The outlook for incremental tests this year was cut to 12,000–15,000 from roughly 20,000, and the 2026 Decipher growth assumption fell to about 16% from about 20%, per the earnings call summary on Finviz.
- Fourth quarter is guided flat. Management expects fourth-quarter Decipher volume roughly flat sequentially, partly because the quarter has two fewer selling days (earnings call, 4 November 2026).
- The 2027 preview is soft. Management's preliminary view is about 10% volume growth but only mid-single-digit revenue growth, with an adjusted EBITDA margin of about 22%, against 27.2% in Q3 2026 (earnings call, 4 November 2026).
- Costs are rising faster than revenue. Non-GAAP research and development was $29.2 million, about double the prior year, and non-GAAP gross margin was 73.7% against 74.9% in Q2 (Finviz summary of the Q3 report). Part of Q3 GAAP profit came from a $10.4 million income tax benefit.
- Insiders were sellers before the drop. GuruFocus counted $22.2 million of insider sales over the 12 months to early October 2026 and no insider buying.
- Legal notices have started. Plaintiff-firm announcements dated 6 November 2026 say they are investigating whether Veracyte's statements on Decipher growth were complete. These are solicitations; no complaint has been reported.
Price setup
The adjusted close was $24.06 on 10 November 2026, 60.2% below the 52-week high of $60.49. The shares closed at $52.52 on 4 November 2026, just before the after-market report, and $50.31 on 28 October 2026.
The relative strength index was 74.2 on 28 October 2026 and is 25.5 now. The earlier reading fits the run-up into the report; a reading near 25 is the kind seen after a sharp one-way decline. The September 2026 low close of $39.80 was broken on the first session after the report. The case is now framed around a new level.
No price below the 10 November 2026 close has been tested.
Crowding evidence has changed. Before the report, heavy insider selling and an overbought reading were the signs. After it, the signs are five target cuts in six sessions, a downgrade and law-firm notices. A buyback is the one source of company buying, and its pace is unreported.
Catalysts ahead
- November to December 2026 (no date set): Share repurchase activity under the $100 million authorisation. The program runs 12 months from 4 November 2026; reported purchases in the 10-Q or later filings would show how much management is using it after the decline.
- 2026-Q4 (no date set): Final Medicare payment rate for Prosigna after MolDX coverage effective 19 August 2026. Prosigna revenue sits outside 2026 guidance; the rate sets how much of the Decipher shortfall it could offset in 2027.
- ~February 2027 (est.): Fourth-quarter and full-year 2026 results. First check on management's call for flat sequential Decipher volume and the 2027 preview of mid-single-digit revenue growth and a 22% adjusted EBITDA margin.
What would change the view
A daily close above $28.37, 13% above the last close (11 November 2026), would show the shares leading the S&P 500 and prove this call wrong.
What it trades with
Veracyte trades with molecular diagnostics and medtech names that depend on Medicare (MolDX) coverage decisions and NCCN guideline revisions. Prostate genomic testing competition and active-surveillance guideline changes affect Decipher volumes directly. The 5 November 2026 market was weak (Nasdaq fell 4.5% on a day Dow gained 250 points, per Benzinga headlines), but the post-report decline is specific to Veracyte's Decipher outlook.
The evidence, claim by claim (8)
- Third-quarter revenue was $151.8 million, up 15% from $131.9 million; testing revenue was $146.4 million; GAAP net income was $31.5 million, including a $10.4 million income tax benefit reported by Finviz; adjusted EBITDA was $41.2 million (27.2% of revenue). Veracyte Q3 2026 results release, 4 November 2026 · as of
- Decipher Prostate revenue was $92.3 million, up 12%, on about 29,900 tests; management said volume came in below expectations. Growth was 20% in Q2 2026. Veracyte Q3 2026 results release, 4 November 2026; Q2 2026 call, 30 July 2026 · as of
- Full-year 2026 testing revenue guidance was cut to $571-573 million from $576-582 million; total revenue guidance narrowed to $590-593 million from $590-596 million; adjusted EBITDA margin above 26% was unchanged. Veracyte Q3 2026 results release, 4 November 2026 · as of
- Management's preliminary 2027 view is about 10% volume growth, mid-single-digit revenue growth and an adjusted EBITDA margin of about 22%; fourth-quarter Decipher volume is expected to be roughly flat sequentially. Veracyte Q3 2026 earnings call, 4 November 2026, as summarised by Finviz · as of
- Afirma revenue was $51.5 million, up 19% on about 19,100 tests; management raised its 2026 Afirma growth outlook to about 16% from 12-14%. Veracyte Q3 2026 results release, 4 November 2026 · as of
- Cash, cash equivalents and short-term investments were $370.5 million; the board authorised repurchases of up to $100 million over 12 months, funded from existing cash. Veracyte Q3 2026 results release, 4 November 2026 · as of
- Analyst actions after the report: Leerink Partners cut to Market Perform with a $35 target (5 November 2026); Needham cut its target to $46 with a Buy (5 November 2026); UBS cut to $35 from $65 with a Buy (9 November 2026); Piper Sandler cut to $30 with Overweight (10 November 2026); Freedom Capital Markets cut to $40 with a Buy (10 November 2026). Benzinga analyst-action headlines · as of
- The adjusted daily close was $24.06 on 10 November 2026, 60.2% below the 52-week high of $60.49; the three-month price change was −43.5% and the 14-day relative strength index was 25.5. Split/dividend-adjusted daily closes · as of
Sources
- Grew total revenue to $151.8 million and testing revenue to $146.4 million, representing 15% year-over-year growth · finviz.com
- Veracyte matches the whisper but a Decipher reset and a soft 2027 preview overshadow the quarter · finviz.com
- Veracyte Q3 Earnings: Decipher Volume Miss Prompts Guidance Compression · panabee.com
- VCYT Shareholder Investigation: SueWallSt Notifies Investors of Potential Securities Claims Involving Veracyte · ariva.de
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