On Thursday, Leerink Partners increased the price target for Guardant Health (NASDAQ:GH) to $60.00, up from the previous target of $50.00. The firm has sustained its Outperform rating for the stock. The revision follows Guardant Health's recent quarterly performance, which addressed significant investor concerns, particularly regarding the potential slowdown in its core G360 business and the prospects of its Shield LBx CRC screening assay.
Guardant Health's G360 business showed a modest sequential growth this quarter, with management expecting an even higher growth trajectory into 2025. This development has mitigated worries over the segment's expansion. Additionally, the Shield LBx CRC screening assay received considerable attention due to the $920 Medicare rate granted during the quarter, with a higher Advanced Diagnostic Laboratory Test (ADLT) rate of $1,495 anticipated in 2025.
Furthermore, Guardant Health anticipates revealing substantial volumes and revenue for Shield in the fourth quarter, with an average selling price (ASP) of $500. This disclosure is expected to pave the way for significant growth in the Shield segment in 2025. Other growth drivers for the company, including the Reveal MRD and TissueNext assay, are also projected to contribute to the upward trend in the coming year.
The financial discipline of Guardant Health's management has been recognized, as they maintain their spending guidance. However, they have increased the revenue guidance for 2024 to $720 million to $725 million, up from the previous forecast of $690 million to $700 million.
This adjustment is a result of the better-than-expected quarterly results and stronger sequential growth expectations for the G360 business. The improved growth outlook is the primary reason behind Leerink Partners' decision to raise the price target for Guardant Health to $60.00.
In other recent news, Guardant Health reported strong second-quarter results with revenues reaching $177.2 million, a 29% increase year-over-year. This growth was primarily driven by the company's oncology business. The FDA approval of Guardant's Shield blood test for colorectal cancer screening, now covered by Medicare, also marked a significant milestone. The company anticipates administering over 1 million of these tests by 2028.
In addition, Guardant Health has launched a $400 million at-the-market equity offering program in partnership with Jefferies LLC. This agreement will allow Guardant Health to sell shares of its common stock at its discretion, subject to market conditions.
Guardant Health has also appointed Roberto A. Mignone, Founder and Managing Partner of Bridger Management LLC, as a new member of its board of directors. His appointment follows the recent FDA approval of Guardant's early-stage colorectal cancer screening product, Shield.
TD Cowen has retained its Buy rating on Guardant Health's stock and raised its price target from $41.00 to $42.00 following these developments. Furthermore, the company raised its 2024 guidance by $15 million after an 8% sales increase in the second quarter. These are recent developments in the company's performance and strategic initiatives.
InvestingPro Insights
Guardant Health's recent performance and positive outlook are reflected in the latest InvestingPro data and tips. The company's market cap stands at $3.11 billion, with a significant revenue growth of 29.2% over the last twelve months as of Q3 2024. This aligns with the article's mention of modest sequential growth in the G360 business and management's expectations for higher growth into 2025.
InvestingPro Tips highlight that Guardant Health has seen a "Significant return over the last week" and a "Strong return over the last month," with data showing a 15.59% 1-week price total return and an 18.45% 1-month price total return. These short-term gains may be attributed to the positive quarterly performance and increased revenue guidance mentioned in the article.
However, it's important to note that analysts do not anticipate the company to be profitable this year, which is consistent with the reported operating income margin of -66.08%. This underscores the importance of the company's growth strategy and financial discipline highlighted in the article.
For investors seeking a more comprehensive analysis, InvestingPro offers 5 additional tips for Guardant Health, providing deeper insights into the company's financial health and market position.
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