I’m hearing buyout rumors circulating about Invitae stock. I’m having a hard time confirming the rumor. The best I can guess is that Citron Research, in its first half of 2019 letter to investors, says its conviction on Invitae was strengthened by this week’s purchase of Genomic Health (GHDX) by Exact Sciences (EXAS).

Citron said that Invitae is growing twice as fast as Exact Sciences and if the stock was trading similar to Exact, it would put Invitae at $80 per share.

The fair value of this stock is $21.75 so it’s a bit above that level at the moment. The Supertrend indicator gave a buy signal back on June 10, 2019, and the stock is so far above the trend line (green) that I would be concerned about a revert to the mean retracement. Chasing any stock during the weakest 6 months of the year seems like a really bad idea.

Could another company be looking at acquiring Invitae in order to stay competitive with Exact Sciences? I don’t know. The current market cap of the company is $2.2 billion but the company only did $160.6 million in sales last year. That’s quite a premium to pay at its current price per share. An argument could be made though that Invitae would sell at a higher premium because of it’s insane revenue growth. Revenue growth is up an incredible 88% this year.

Call volume has recently picked up in NVTA stock. Bullish option flow detected in Invitae with 4,550 calls trading, 4x expected, and implied vol increasing over 5 points to 78.57%. Aug-19 20 calls and Sep-19 30 calls are the most active options, with total volume in those strikes near 2,100 contracts.

The options flow looks like this is the same buyer and the order was broken up in a sweep for at least the lower three orders. I wonder if this was Citron Research. Notice how the orders occurred at the Ask, and the spot price is rising as these orders came in.

The company is expected to report earnings on August 6, 2019.

Invitae stock does not meet the strict requirements for stocks in the GST Portfolio but I wanted to bring NVTA stock to your attention with the buyout rumors circulating after this week’s purchase of Genomic Health by Exact Sciences.

Disclosure: I do not hold any position in NVTA stock.