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Monday, Canaccord Genuity initiated coverage of GRAIL, Inc. (NASDAQ:GRAL), a healthcare company specializing in early cancer detection, giving it a Buy rating and setting a 12-month price target of $32.00. The target represents potential upside from the current price of $27, with the stock already showing impressive momentum, having gained over 51% year-to-date and nearly 98% over the past year. According to InvestingPro analysis, the stock is currently trading near its Fair Value.
GRAIL’s flagship product is the Galleri multi-cancer early detection (MCED) test, which leverages the company’s proprietary targeted methylation platform. The test is designed to detect over 50 types of cancer, including many common cancers and those without recommended screening methods. The company has demonstrated strong revenue growth of 34.9% in the last twelve months, though InvestingPro data reveals that maintaining profitability remains a challenge, with negative gross profit margins.
Canaccord’s analysis included a survey of 20 clinicians and 253 potential patients to gauge the current acceptance of MCED tests and the Galleri test specifically. The survey aimed to identify factors that could enhance the adoption of these tests, such as FDA approval, Medicare coverage, and inclusion in medical guidelines.
While Canaccord acknowledges the long-term potential of MCED and the Galleri test, the firm also recognizes the uncertainties that GRAIL faces in the near to medium term. These include regulatory hurdles and the need for broader market acceptance.
Despite these challenges, Canaccord remains optimistic about the stock’s prospects. The firm’s valuation takes into account GRAIL’s financial outlook, including cash burn, and the potential catalysts that could drive the company’s growth. While the company maintains a healthy current ratio of 10.66, indicating strong liquidity, investors should note that GRAIL is quickly burning through cash. Canaccord’s target price reflects a belief in the company’s upside, while maintaining what they consider a reasonable and grounded approach to valuation. For deeper insights into GRAIL’s financial health and growth prospects, including 10 additional ProTips and comprehensive analysis, check out the detailed Pro Research Report available on InvestingPro.
In other recent news, Grail Inc. reported a 26% increase in revenue for the fourth quarter of 2024, reaching $38.3 million. Despite a net loss of $97.1 million, the company managed to reduce its quarterly loss by 48%. The company’s annual revenue for 2024 was $125.6 million, marking a 35% increase from the previous year, driven primarily by a 45% rise in screening revenue. Grail also introduced an enhanced version of its Galleri test, which is now more cost-effective and scalable. The U.S. Military’s TRICARE health insurance program has added the Galleri test as a covered benefit for eligible patients, expanding its reach. Grail maintained its 2025 guidance, anticipating a cash burn reduction of over 40% to no more than $320 million. The company plans to complete its registrational studies and submit a modular PMA to the FDA by the first half of 2026. Despite potential delays in regulatory approvals and intense market competition, Grail remains focused on its strategic initiatives.
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