GeneDx stock jumped for the second day running Tuesday after the American Academy of Pediatrics green-lit genetic testing for a larger pool of children.
The biotech company performs whole genome and exome sequencing — methods of reading the DNA to screen for genetic diseases. On Monday, the AAP recommended pediatricians pursue genetic tests for children suspected to have global developmental delays or intellectual disabilities.
Jefferies analyst Tycho Peterson says the update "provides a meaningful unlock" for pediatricians to order genetic tests and secure broader reimbursement.
"Put another way, this now allows GeneDx to begin directly targeting the large and untapped pediatrics market, where physicians now have a green light to order (genetic tests) directly versus outsourcing to geneticists, where throughput is more limited," he said in a report.
GeneDx stock jumped 14% to 90.90 on Tuesday, following a 19% advance on Monday. Monday's move pushed GeneDx shares above their 50-day and 200-day moving averages, according to MarketSurge chart analysis.
GeneDx Stock: A Multibillion-Dollar Opportunity
GeneDx sees the updated guidelines as a $2.5 billion opportunity.
"The new guidelines represent a significant shift in pediatric medicine, positioning general pediatricians to initial genetic testing earlier in the diagnosis process," a spokeswoman said in an email to Investor's Business Daily.
It can take families an average of five years to receive a diagnosis of developmental delays for their children. Roughly half of those are due to genetic conditions.
"This is a major milestone in expanded use of exome and genome testing for pediatricians, especially in an era where pediatric specialists and generalists have long wait-lists and there are growing concerns about healthcare access for rural communities," she said.
The new guidelines could help bolster GeneDx's sales, which are already on the rise. Last year, the firm notched $305.5 million in sales, surging more than 57% year over year. By 2029, the company is expected to report more than $670 million in sales, according to FactSet.
IBD 50 Biotech Stock
GeneDx stock has largely trended sideways over recent months in the wake of a first-quarter report that beat expectations, but disappointed investors.
Still, shares rank 30th on the IBD 50 list of elite growth stocks.
GeneDx stock also has matching, and strong, IBD Digital Composite and Relative Strength ratings of 95. This puts shares in the leading 5% of all stocks when it comes to fundamental and technical metrics and 12-month performance.
Follow Allison Gatlin on X/Twitter at @AGatlin_IBD.
