Guardant Health Reports Strong Earnings Despite Stock Drop
Guardant Health Reports Fourth-Quarter Earnings
Recently, Guardant Health reported an adjusted earnings per share (EPS) loss of 62 cents for the fourth quarter, demonstrating a slight improvement compared to the 64 cents loss from the previous year. This was better than the consensus estimate of a 74 cents loss, signaling positive momentum for the company.
Impressive Revenue Figures
The cancer diagnostics company achieved remarkable sales of $201.8 million, reflecting a 30% increase year over year. This growth surpassed the consensus expectation of $192.14 million, primarily driven by a surge in the volume of clinical and biopharma tests. Specifically, clinical tests grew significantly by 24%, while biopharma tests saw a rise of 16%.
Clinical and Biopharma Testing Volume
During the reporting quarter, Guardant Health conducted approximately 57,300 oncology clinical tests exclusive of the Shield test and 11,050 biopharma tests. This increase in testing volume is indicative of the rising demand for precision oncology services.
Reimbursement Improvements
A substantial factor contributing to the increase in revenue was the improved reimbursement rates for the Guardant360 laboratory-developed test (LDT), which reached $5,000 for Medicare patients. Additionally, there was an uptick in reimbursement across both Medicare Advantage and commercial payers, further benefiting the company.
Future Outlook for Revenue
Guardant Health is projecting revenue between $850 million and $860 million for fiscal year 2025, which lines up closely with the consensus estimate of $848.9 million. This forecast indicates the company's confidence in maintaining its growth trajectory.
Analysts' Sentiment on Stock Performance
Following the earnings report, various analysts provided their perspectives on Guardant Health's stock. William Blair expressed optimism, noting that the stock could continue to gain momentum as investors grow more confident in the company's strategic direction.
Insights from Analysts
- Analyst Andrew F. Brackmann mentioned that while growth may slow before Exact Sciences Corp's midyear results for its blood-based colorectal cancer screening test, Guardant Health's strong financial performance and updates from its own data will support the stock's momentum.
- Stifel's Daniel Arias maintained a Buy rating on Guardant Health, raising the price target from $45 to $53.
- JP Morgan analyst Rachel Vatnsdal reaffirmed an Overweight rating, increasing the price target from $50 to $55.
- Raymond James's Andrew Cooper reiterated Guardant Health with an Outperform rating, enhancing the price target from $39 to $59.
- Goldman Sachs analyst Matthew Sykes kept a Buy rating and pushed the price target up from $49 to $56.
Current Stock Action
As of the latest trading session, GH stock experienced a decline of 10.60%, trading at approximately $42.40. This drop came in the wake of the newly released earnings report.
Conclusion
In summary, despite the drop in stock price, Guardant Health has showcased robustness through its solid earnings report, increased revenue, and optimistic guidance for the future. As the cancer diagnostics sector continues to evolve, Guardant Health seems poised to adapt and thrive in this dynamic landscape.
Frequently Asked Questions
What is Guardant Health's latest earnings report about?
Guardant Health reported a fourth-quarter adjusted EPS loss of 62 cents and total sales of $201.8 million, exceeding expectations.
What factors contributed to Guardant Health's revenue growth?
The revenue growth was driven by increased testing volume in both clinical and biopharma sectors, along with improved reimbursement rates for tests.
What is the future revenue forecast for Guardant Health?
For fiscal year 2025, Guardant Health forecasts revenue between $850 million and $860 million.
How are analysts viewing Guardant Health's stock?
Analysts have expressed optimism about the stock's potential, providing ratings ranging from Buy to Outperform with increased price targets.
What has been the recent price action of Guardant Health's stock?
Guardant Health's stock (GH) is down approximately 10.60% at $42.40 following the earnings announcement.
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