On Friday, Piper Sandler confirmed its Overweight rating on Guardant Health (NASDAQ:GH) shares with a steady price target of $34.00. This aligns with broader analyst sentiment, as InvestingPro data shows 10 analysts have recently revised their earnings expectations upward, with price targets ranging from $34 to $60. Piper Sandler's analysis is bolstered by a recent survey of 38 oncologists about their use of profiling and market share, which indicates a positive outlook for companies like Guardant Health and Tempus.
The survey revealed that despite the maturity of the profiling market, it experiences a similar growth rate to the minimal residual disease (MRD) market, with two-thirds of oncologists reporting an increase in their use of profiling. This market momentum is reflected in Guardant Health's impressive 29.2% revenue growth over the last twelve months. Liquid biopsy, an area where Guardant Health is considered to have a first-mover advantage, is expected to grow even more rapidly than comprehensive genomic profiling (CGP).
Piper Sandler's endorsement of Guardant Health's stock is rooted in the company's discounted valuation. The firm's $34 price target is derived from a discounted cash flow (DCF) model, which anticipates an 18% compound annual growth rate (CAGR) in revenue from 2026 through 2032. The model also accounts for $1,359 million in debt and $999 million in cash and equivalents, alongside a 9% weighted average cost of capital (WACC).
The analyst noted that while the survey results are favorable for both Guardant Health and Tempus, their preference leans towards Guardant Health due to its valuation. The company maintains strong liquidity with a current ratio of 6.22, though InvestingPro analysis suggests the stock is currently trading above its Fair Value.
The firm also cautioned of potential risks that could affect Guardant Health's performance, including competition, reimbursement challenges, evolving technologies, the adoption of new products, and the early adoption status of MRD and CGP testing. For deeper insights into Guardant Health's financial health and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro, which covers over 1,400 US stocks with expert analysis and actionable intelligence.
In other recent news, Guardant Health, a precision oncology company, has reported its financial results for the third quarter of 2024. While specific financial details were not disclosed, the absence of reported financial misses suggests that the company may have met its expectations for the quarter.
Guardant Health has also announced a partnership with pharmaceutical company Boehringer Ingelheim to seek regulatory approval for Guardant360® CDx, a liquid biopsy test, as a companion diagnostic for zongertinib, Boehringer's investigational drug for non-small cell lung cancer. This collaboration aims to improve targeted therapy selection for patients diagnosed annually with this mutation. The company has shown impressive revenue growth of 29.2% over the last twelve months and maintains robust financial flexibility with a healthy gross profit margin of 60.31%. InvestingPro analysis reveals 10 analysts have revised their earnings upwards for the upcoming period.
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