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On Monday, Canaccord Genuity maintained a Buy rating on Guardant Health (NASDAQ:GH) shares and increased the price target to $60, marking a significant rise from the previous target of $42. The adjustment reflects the analyst’s confidence in the company’s financial trajectory, underscored by higher profit margins anticipated in their discounted cash flow (DCF) model, which now accounts for Average Selling Price (ASP) tailwinds. According to InvestingPro data, analyst targets for the stock range from $34 to $65, with the stock showing remarkable strength through a 120.75% return over the past year.
Guardant Health’s fourth-quarter earnings for 2024, released after the market closed on Thursday, February 20, met the forecasts set by the company’s preannouncement in January. The results were propelled by robust growth in both clinical and biopharma test volumes, as well as sustained advantages from prior period cash collections. The company demonstrated strong financial fundamentals with revenue growth of 31.04% and a healthy current ratio of 4.68, indicating solid liquidity. In the fourth quarter, Guardant Health recorded $4 million in revenue from its Shield test and projects revenue from this product to reach between $25 million and $30 million in 2025, based on conservative ASP estimates.
Furthermore, Guardant’s Reveal test, which is used for detecting minimal residual disease (MRD), is expected to reach a turning point due to recent expansions in reimbursement coverage. The company’s initial revenue guidance for 2025 suggests an increase of 19-20% over the previous year, not including the revenue from prior periods in 2024. The analyst emphasized the undervalued nature of Guardant Health’s stock, pointing to the company’s solid foundation in therapy selection and advancements in MRD and screening sectors, while also noting the near-term cash burn concerns. For a deeper analysis of Guardant Health’s valuation and growth prospects, InvestingPro subscribers can access the comprehensive Pro Research Report, which includes detailed financial health scores and additional expert insights.
In other recent news, Guardant Health has announced its fourth-quarter 2024 earnings, reporting total revenues of $202 million, which exceeded consensus estimates by 7%. The company also set a revenue projection for 2025 between $850 million and $860 million, reflecting a 15-16% year-over-year increase. This forecast includes anticipated Shield revenue of $25 million to $30 million, surpassing the consensus estimate. Analysts from Canaccord, BTIG, Bernstein, Citi, and BofA have all raised their price targets for Guardant Health to $60, with BofA setting a slightly lower target of $56, while maintaining favorable ratings. The strong earnings report and optimistic guidance have led to increased analyst confidence, with BTIG naming Guardant Health as a top pick and emphasizing the company’s potential for exceeding expectations in 2025.
Guardant Health’s growth in clinical and biopharma test volumes, alongside an uptick in average selling prices, has contributed to its positive outlook. The company’s Precision Oncology revenue in the fourth quarter reached $184 million, supported by the strength of its G360 tests. Additionally, Guardant Health’s Reveal test is expected to gain traction due to recent reimbursement expansions. The company is also managing its expenses with a projected cash burn between $225 million and $235 million for 2025, while maintaining a strong cash reserve of $944 million at the end of fiscal year 2024. Analysts have noted the company’s strong market position and potential growth opportunities, with Citi and Canaccord highlighting the undervaluation of Guardant Health shares.
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