Head to Head Review: Veracyte (VCYT) vs. Psychemedics (PMD)

Veracyte (NASDAQ:VCYT) and Psychemedics (NASDAQ:PMD) are both small-cap medical companies, but which is the superior investment? We will compare the two businesses based on the strength of their dividends, analyst recommendations, earnings, institutional ownership, valuation, profitability and risk.

Risk & Volatility

Veracyte has a beta of 0.74, suggesting that its stock price is 26% less volatile than the S&P 500. Comparatively, Psychemedics has a beta of 0.73, suggesting that its stock price is 27% less volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
Veracyte -33.00% -65.73% -33.89%
Psychemedics 14.24% 26.58% 18.41%

Valuation and Earnings

This table compares Veracyte and Psychemedics’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Veracyte $71.95 million 8.00 -$31.00 million ($0.91) -15.60
Psychemedics $39.70 million 2.45 $6.12 million N/A N/A

Psychemedics has lower revenue, but higher earnings than Veracyte.

Insider and Institutional Ownership

82.4% of Veracyte shares are held by institutional investors. Comparatively, 59.4% of Psychemedics shares are held by institutional investors. 13.7% of Veracyte shares are held by company insiders. Comparatively, 8.6% of Psychemedics shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Dividends

Psychemedics pays an annual dividend of $0.72 per share and has a dividend yield of 4.1%. Veracyte does not pay a dividend.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Veracyte and Psychemedics, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Veracyte 0 1 4 0 2.80
Psychemedics 0 0 0 0 N/A

Veracyte currently has a consensus target price of $11.00, indicating a potential downside of 22.54%. Given Veracyte’s higher probable upside, equities analysts clearly believe Veracyte is more favorable than Psychemedics.

Summary

Veracyte beats Psychemedics on 7 of the 12 factors compared between the two stocks.

Veracyte Company Profile

Veracyte, Inc. operates as a genomic diagnostics company in the United States. The company uses genomic technology to resolve diagnostic uncertainty. It offers Afirma Thyroid FNA Analysis solution; cytopathology testing services; and the Afirma Malignancy Classifiers to manage thyroid nodule patients. The company's products also include Percepta Bronchial Genomic Classifier solution for use in lung cancer screening and diagnosis; and Envisia Genomic Classifier solution for idiopathic pulmonary fibrosis. Veracyte, Inc. sells its products through product specialists, institutional managers, account managers, and medical science specialists. Veracyte, Inc. has research collaboration agreement with Loxo Oncology to develop medicines for patients with genetically defined cancers. The company was formerly known as Calderome, Inc. and changed its name to Veracyte, Inc. in March 2008. Veracyte, Inc. was incorporated in 2006 and is headquartered in South San Francisco, California.

Psychemedics Company Profile

Psychemedics Corporation provides testing services for the detection of drugs of abuse through the analysis of hair samples in the United States and internationally. The company's tests provide quantitative information that can indicate the approximate amount of drug ingested, as well as historical data, which can show a pattern of individual drug use over a longer period of time. It provides screening and confirmation by mass spectrometry using industry-accepted practices for cocaine, marijuana, PCP, amphetamines, synthetic cannabinoids, and benzodiazepines, as well as opiates, including heroin, hydrocodone, hydromorphone, oxycodone, oxymorphone, and codeine. The company offers its services to employers for applicant and employee testing; treatment professionals, law enforcement agencies, school administrators, and parents concerned about their children's drug use; and Fortune 500 companies and small to mid-size corporations, as well as school and government entities. Psychemedics Corporation was founded in 1985 and is headquartered in Acton, Massachusetts.

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