CareDx falls after analyst says AlloSure 'mostly useless' as kidney diagnostic

Shares of transplant diagnostics company CareDx (CDNA) are falling after an earlier report from Sahm Adrangi of Kerrisdale Capital. KERRISDALE SHORT THESIS: Adrangi said in the report that Kerrisdale is short CareDx due to the fact that "share price has increased by 30x over just the last two years and now trades at over 18x sales. The meteoric rise and generous valuation have come in the wake of excitement over the commercialization of AlloSure, a blood test intended to identify organ rejection in kidney transplant recipients." Kerrisdale believes that "AlloSure is mostly useless, and potentially dangerous if used improperly. It should be obvious that a diagnostic test for transplant rejection that misses about 40% of rejections compared to the current standard of care has little place in clinical practice." ANALYST VIEW: Less than a week ago, Craig-Hallum analyst Per Ostlund raised his price target for CareDx to $48 from $40 after President Trump signed an executive order to remake kidney care in the U.S., laying out a series of initiatives that clearly cement organ transplantation as a preferred treatment option for those suffering from kidney disease. While the initiatives will no doubt take some measure of time to translate into an increase in transplants, the analyst believes the order is an "unmitigated positive and wind at the back" for CareDx, which is involved in patient care across the transplant continuum. Ostlund reiterated a Buy rating on the shares at the time. PRICE ACTION: Shares of CareDx are down over 14%, or $5.31, to $32.09 per share in afternoon trading.