What happened
Shares of Invitae (NYSE: NVTA) were jumping 6.7% higher as of 10:53 a.m. ET on Wednesday after rising as much as 12.9% earlier in the morning. The medical genetics company didn't announce any news today.
On Tuesday, though, Invitae and Praxis Precision Medicines stated in a press release that Invitae's Citizen platform's clinical insights were used in Praxis' Investigational New Drug (IND) application for experimental drug PRAX-222 in treating epilepsy. Did that announcement light a fire under the genetic testing stock? Nope. Invitae's shares fell 5% yesterday.
So what's behind today's gain? The most likely culprit is the overall stock market's bounce. Major market indexes were rising on Wednesday morning as investors anticipated the latest interest rate decision by the Federal Reserve.
So what
Invitae's business could be impacted to some extent by the Fed's actions. It's possible that significantly higher interest rates could slow down the U.S. economy and cause medical genetic testing volumes to decline. Invitae also isn't profitable yet. Higher rates could make it more costly for the company to borrow money to fund its business.
On the other hand, today's stock market gains appear to reflect that investors expect the Federal Reserve to be consistent with its previously stated policy to get inflation under control. That would help stocks, including Invitae, over the long run.
Investors probably shouldn't focus too much on Invitae's jump today. The stock appears to be merely benefiting from the old adage that "a rising tide lifts all boats."
Now what
What should investors focus on with Invitae? Its business. The company's growth rate has slowed, but management anticipates a return to stronger growth beyond 2023. Invitae is also exiting less profitable businesses to accelerate its path to achieving positive cash flow.
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Keith Speights has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Invitae. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
