We recently compiled a list of the 10 Best Organ Transplant and Diagnosis Stocks To Buy Now. In this article, we are going to take a look at where CareDx, Inc (NASDAQ:CDNA) stands against the other organ transplant and diagnosis stocks.
In the dynamic landscape of healthcare, the importance of organ transplantation cannot be overstated. Transplant diagnostics is a specialized area of medicine dedicated to evaluating the compatibility between organ donors and recipients. This involves a range of laboratory tests, including HLA typing, cross-matching, and detection of antibodies, to reduce the risk of rejection and guide individualized treatment plans.
These diagnostics are essential for ensuring the success of organ transplants by accurately pairing donors with recipients. Technological advancements continually improve the accuracy and effectiveness of transplant diagnostics, playing a vital role in enhancing patient outcomes and shaping the future of organ transplantation.
Given that transplantation is a preferred choice for individuals with advanced kidney, heart, and even lung failure, it has given rise to some of the biggest and most successful companies in the healthcare sector. These companies have generated significant value by catering to the needs of individuals needing organ transplants, presenting attractive investment opportunities.
The growing demand and acceptance of organ transplantation fuel the expansion of the global organ and tissue transplant market. Consequently, the transplant sector is expanding at a compound annual growth rate (CAGR) of 9.35%, projected to reach a market value of $31.2 billion by 2029.
The expansion is propelled by breakthroughs such as living donor transplants and advanced technologies like next-generation sequencing for precise matching. The effectiveness of transplantation techniques and the high success rates of transplant procedures also contribute to the market’s growth.
Additionally, the surge in chronic disease cases and the growing number of surgical procedures contribute to the global organ transplant market growth. The increase in organ registrations is also anticipated to drive up the demand for organ transplants in the coming years. For instance, every year, over 200,000 new cases of lung cancer are reported, affirming the need for lung transplantation and surgery. The increasing need for organ and tissue transplants as a successful therapy for certain long-term illnesses is propelling the expansion of the worldwide transplant industry.
Rising funding for solid organ transplantation is also contributing to the market’s growth, creating some of the best investment opportunities around the 10 best organ transplant and diagnosis stocks to buy now. For instance, funding for organ transplant research was $208 million in 2020.
North America continues to exhibit significant expansion within the worldwide transplantation industry. The region’s robust infrastructure and the presence of substantial corporations play key roles in fueling the growth of the transplantation market, making it a hotbed for some of the best investment opportunities.
The 10 best organ transplant and diagnosis stocks to buy now are companies located in North America, as the region boasts sophisticated healthcare systems, advanced research and development, and established networks for organ procurement and transplantation. Cutting-edge medical facilities facilitate the successful execution of organ transplantation surgeries.
Likewise, the region’s organ transplant market was valued at $4.32 billion in 2023 and is projected to lead the worldwide market in the upcoming years. This leadership is anticipated to continue due to the high demand for innovative tissue grafts and organ transplants. Europe ranked as the second-largest market in the same year. The expansion of this market is linked to the rise in transplant surgeries and the crucial efforts by various governments to promote awareness about organ donation in the area.
Asia Pacific also experienced considerable growth, driven by the high incidence of organ failure in the area, a consequence of the increasing prevalence of chronic illnesses among the elderly population. In 2023, the Asia-Pacific organ transplant diagnostics market was valued at $1.25 billion. It is expected to reach $3.45 billion by 2033, with a CAGR of 10.73%. Latin America is also poised for growth. Mexico and Brazil’s organ donation and transplantation sectors offer promising prospects for significant market participants.
Ongoing research and development in organ transplantation are leading to significant advancements and innovations in the market. As per the National Institute of Health in May 2022, the budget allocated for transplantation research was $721 million, $702 million, and $735 million in 2020, 2021, and 2022 (estimated).
North America continues to set the pace on innovation in the organ transplant sector, with Massachusetts General Hospital (MGH) confirming the world’s first successful transplant of a genetically-edited pig (porcine) kidney into a 62-year-old man living with end-stage kidney disease (ESKD). The patient died almost two months after the transplant at 62. The historic procedure was carried out on March 16 at Massachusetts General Hospital. Even though the hospital said the cause of death was not related to the transplant, we need more clinical evidence for the safety of these procedures.
This transplantation marks an essential milestone in providing patients with more readily available organs. The successful organ transplant promises to offer a lifeline to millions of patients worldwide suffering from kidney failure.
Additionally, it marks an essential step in the transplantation of organs or tissues from one species to another as a potential solution to the worldwide organ shortage. According to the United Network for Organ Sharing (UNOS), more than 100,000 people in the U.S. await an organ for transplant, and 17 people die each day waiting for an organ.
The developments and growth being experienced in the organ transplant segment offer some of the best ways to diversify investment portfolios in the healthcare sector. The opportunities are expected to grow exponentially, considering that there are over 103,000 people on the national transplant waitlist looking for organ transplantation in the US alone.
Additionally, every 8 minutes, one person is added to the list. The strong demand for organ transplants should continue to drive growth in the market segment. That said, now is the best time to pay close attention to the 10 best organ transplant and diagnosis stocks to buy now and benefit from the growing organ transplant market.
Our Methodology
We sifted through online rankings and healthcare ETFs to identify companies involved in the organ transplant and diagnosis industries. We then selected the 10 most widely held stocks by hedge funds from an initial pool of 15 companies. The stocks are ranked based on the number of hedge funds that own stakes in them, according to the Insider Monkey database.
We also mentioned the number of hedge funds that had bought these stocks during the same filing period. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A healthcare professional in front of a console, monitoring the progress of a transplant patient.
CareDx, Inc (NASDAQ:CDNA)
Market Cap as of August 1: $1.24 Billion
Hedge Funds Holding Stakes: 15
CareDx, Inc (NASDAQ:CDNA) is involved in exploring, creating, and marketing diagnostic products for transplant recipients and their caregivers across the United States and globally. It also offers AlloSure Kidney, a solution derived from donor cells containing DNA but no cells, for patients undergoing kidney transplants; AlloMap Heart, which analyses gene expression for patients who have received heart transplants.
As one of the top 10 best organ transplant and diagnosis stocks to buy now, CareDx, Inc (NASDAQ:CDNA) is up by more than 60% for the year and continues to outperform the overall market. It delivered full-year sales of $280.3 million in 2023, down 13% year over year. Hedge funds holding stakes in CareDx, Inc (NASDAQ:CDNA) dropped to 15 in Q1 2024, according to Insider Monkey, from 19 as of the end of 2023.
In its first quarter 2024 investor letter, Baron Discovery Fund commented on CareDx, Inc (NASDAQ:CDNA) as follows:
“CareDx, Inc (NASDAQ:CDNA) is a diagnostic company that facilitates organ donor matches pre-transplant and rejection monitoring post-transplant. Transplant rejection testing is recurring and can help ensure the right immunosuppressant treatment to avoid over dosage or organ loss. After selling the position in the first quarter of 2023, we re-established an investment in the company. At the time, we noted that the reason for sale was “a very unexpectedly negative notice out of MolDx (which is the CMS-related entity that determines pricing and reimbursement criteria for diagnostic tests) exceeded our worst downside scenarios. The vagueness of the notice from MolDx, combined with the potential for a far reduced paid volume of approved tests for Medicare patients, puts a dramatic amount of current revenue and profitability at risk. We determined that until the issue is resolved, we could not properly underwrite our investment in the company.” As things currently stand, the company has lapped the massive negative revenue effect of the CMS notice and has started growing revenues again under the lower reimbursement regime. Combined with improvement in cash collections and meaningful efficiency improvements in operating expenses, we believe the company will be cash flow breakeven by 2025 and then will be completely self-funding given $235 million of cash and no debt on its balance sheet. The company trades at only 1.3 times its enterprise value to sales ratio, which should be at least double that level. We believe there is a reasonable chance that the CMS guidelines are reversed or at least improved from current levels. This would be a blue sky scenario, where we could see multiple doubles of valuation in a short period of time.”
Overall CDNA ranks 9th on our list of the best organ transplant and diagnosis stocks to buy. You can visit 10 Best Organ Transplant and Diagnosis Stocks To Buy Now to see the other organ transplant and diagnosis stocks that are on hedge funds’ radar. While we acknowledge the potential of CDNA as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than CDNA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.