Value
3.2/10data confidence 67%| Component | Sub-score |
|---|---|
| P/E | 3.7 |
| P/S | 4.7 |
| Fwd P/E | 2.0 |
| Analyst target | 3.0 |
- ▸Forward P/E: 55.9x
CDNA · Why this verdict
Why CareDx (CDNA) is rated BUY WAIT
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results. How we score · Editorial policy
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VerdictBUY WAIT
Overall score6.1/10
ConfidenceMEDIUM
MacroRISK_OFF
TrendMatrix Research · core thesis
Engine thesis — one sentence
CareDx combines strong revenue growth and a Rule of 40 pass backed by positive free cash flow, but notable insider selling, an overbought momentum reading, and a below-floor risk score flagged by the engine argue for a cautious stance despite the growth story.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The company is FCF-positive despite a GAAP loss, with a 17% FCF margin and a 4.7% FCF yield, and it passes the engine's Rule of 40 test with a score of 56. Quality breakdown | The Rule of 40 score should stay above 40 and FCF margin should hold above 10% over the next 4 quarters. | →Stable |
| CounterA Rule of 40 pass driven mostly by high revenue growth can mask a still-unprofitable core business on a GAAP basis, and growth could decelerate faster than margins improve. | ||
Revenue growth is running at 39% year-over-year, pushing the engine's growth score to a maximum 10.0. Growth breakdown | Revenue growth should stay above 25% YoY over the next 4 reported quarters to sustain this pillar. | →Stable |
| CounterGrowth this strong in a diagnostics testing company can decelerate sharply as reimbursement dynamics or test volume normalize off a smaller comparison base. | ||
Insiders have sold $1,836,505 (0.122% of market cap) across 8 transactions in the past 90 days with zero buys, producing a bearish insider signal. Insider | Insider selling should slow to fewer than 4 transactions per quarter with net value sold below $1,000,000 if confidence is stabilizing. | →Stable |
| CounterBroad-based selling spread across many transactions can reflect routine, pre-scheduled selling plans (Rule 10b5-1) among a diversified insider base rather than a coordinated signal of eroding confidence. | ||
RSI at 72 signals an overbought condition even as on-balance volume is falling, a divergence that softened the momentum score to 5.4, just below the engine's 5.5 threshold. Momentum breakdown | RSI should cool into the 40-60 range without a price breakdown of more than 10% over the next month if the advance has genuine support. | →Stable |
| CounterOverbought readings in high-growth healthcare names can persist for extended periods when a strong growth narrative is driving continued buying, regardless of short-term volume divergences. | ||
The company is FCF-positive despite a GAAP loss, with a 17% FCF margin and a 4.7% FCF yield, and it passes the engine's Rule of 40 test with a score of 56.
→StableQuality breakdown
- Expectation
- The Rule of 40 score should stay above 40 and FCF margin should hold above 10% over the next 4 quarters.
CounterA Rule of 40 pass driven mostly by high revenue growth can mask a still-unprofitable core business on a GAAP basis, and growth could decelerate faster than margins improve.
Revenue growth is running at 39% year-over-year, pushing the engine's growth score to a maximum 10.0.
→StableGrowth breakdown
- Expectation
- Revenue growth should stay above 25% YoY over the next 4 reported quarters to sustain this pillar.
CounterGrowth this strong in a diagnostics testing company can decelerate sharply as reimbursement dynamics or test volume normalize off a smaller comparison base.
Insiders have sold $1,836,505 (0.122% of market cap) across 8 transactions in the past 90 days with zero buys, producing a bearish insider signal.
→StableInsider
- Expectation
- Insider selling should slow to fewer than 4 transactions per quarter with net value sold below $1,000,000 if confidence is stabilizing.
CounterBroad-based selling spread across many transactions can reflect routine, pre-scheduled selling plans (Rule 10b5-1) among a diversified insider base rather than a coordinated signal of eroding confidence.
RSI at 72 signals an overbought condition even as on-balance volume is falling, a divergence that softened the momentum score to 5.4, just below the engine's 5.5 threshold.
→StableMomentum breakdown
- Expectation
- RSI should cool into the 40-60 range without a price breakdown of more than 10% over the next month if the advance has genuine support.
CounterOverbought readings in high-growth healthcare names can persist for extended periods when a strong growth narrative is driving continued buying, regardless of short-term volume divergences.
Per-dimension breakdown
Quality
7.1/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 9.8 |
| ROA | 0.0 |
| Gross margin | 10.0 |
| Op margin | 0.1 |
| Net margin | 10.0 |
| Current ratio | 8.4 |
| FCF quality | 7.1 |
| Moat | 9.0 |
| Rule of 40 | 9.5 |
| Piotroski F | 6.7 |
- ▸Excellent ROE: 29%
- ▸Strong margins: 24%
- ▸Wide economic moat
- ▸Compounder quality: strong returns + growth
Growth
10.0/10data confidence 33%| Component | Sub-score |
|---|---|
| Rev growth | 10.0 |
- ▸Strong growth: 52% YoY
Momentum
6.3/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.3 |
| MACD | 6.8 |
| OBV | 10.0 |
| MA position | 9.0 |
| Volume | 1.2 |
- ▸Overbought (RSI 73)
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
6.2/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 8.0 |
| Analyst rating | 6.6 |
| Price target | 3.6 |
- ▸LLM news sentiment: +0.60 (n=1)
- ▸Light analyst coverage (6.0) — signal dampened
Insider
3.0/10data confidence 100%| Component | Sub-score |
|---|---|
| materiality | 3.0 |
| insider conviction | 2.0 |
| holder change | 3.8 |
| notable moves | 3.0 |
- ▸Notable insider selling — $3,904,519 (0.105% of mkt cap)
Peer rank
7.8/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 5.1 |
| quality rank | 9.0 |
| growth rank | 8.8 |
- ▸Superior ROE vs peers
- ▸Best-in-class margins
Technical
3.8/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 0.6 |
| support resistance | 1.1 |
| 52w position | 9.6 |
Risk (lower is worse)
4.5/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 3.4 |
| days to cover | 6.0 |
| volatility | 0.0 |
| put call | 10.0 |
| implied vol | 0.0 |
| beta | 2.1 |
| debt equity | 9.8 |
- ▸High IV: 90%
- ▸Concentration risks: 1 HIGH, 1 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
6.3/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 6.7 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| news activity | 5.0 |
- ▸Strong earnings: 3B/1M
- ▸Earnings today
How the verdict was assembled
Engine trigger
Earnings today. Wait until post-earnings.
Engine technical detail
verdict_path:
L3:NEWS_BLOCK|ENTRY_STICKY:WITHIN_BANDPassed (5)
- MOMENTUM:6.3>=5.5
- INSIDER:OK
- NEWS_BOOST:ANALYST:0.60
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- ASYMMETRY:-1.4=NEGATIVE
- EARNINGS_PROXIMITY:0d<=7d
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
-1.41
Upside
-21.2%
Downside
15.0%
Sizing output
STARTER
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilityAggressive — Beta 2.38>1.3, MCap $3.7B<$5B
Investment implication
A recent news event triggered an L3 news-block on the verdict path. Trigger: Earnings today. Wait until post-earnings. The 10-dimension scores remain Growth at 10.0 (strongest), but ASYMMETRY:-1.4=NEGATIVE also fails — the news block is the proximate trigger, not the sole driver.
The strongest dimensions are Growth at 10.0, Peer rank at 7.8, and Quality at 7.1; the weakest are Insider at 3.0, Value at 3.2, and Technical at 3.8. The V9 engine flagged 2 failed gates with 1 warning, producing an asymmetric reward-to-risk of -1.41 and an engine sizing output of STARTER.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Rule Of 40 Pass With Positive Fcf
Trip ifRule of 40 score falls below 40.
- P2Strong Revenue Growth Profile
Trip ifRevenue growth falls below 20% YoY for 2 consecutive quarters.
- P3Notable Insider Selling Pressure
Trip ifNet insider selling exceeds $3,000,000 over the next 90 days.
- P4Overbought Momentum Near Highs
Trip ifPrice falls more than 10% within the next month while RSI stays above 65.