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Tuesday, Guardant Health (NASDAQ:GH) shares are anticipated to rise following a positive update from Citi analysts. The firm reiterated a Buy rating and a $60.00 price target for the company. According to InvestingPro data, the stock has shown significant momentum with an 88.7% return over the past year, despite recent volatility that led to a 13.6% decline in the past week. Analysts at Citi highlighted that Guardant Health announced this morning that its Shield product has been granted Advanced Diagnostic Laboratory Test (ADLT) status by the Centers for Medicare & Medicaid Services (CMS). This designation will result in an increased Medicare reimbursement rate to $1,495, a significant rise from the previous $920, for a nine-month period beginning April 1, 2025.
During this nine-month timeframe, Guardant Health is set to collect and evaluate private payer data, which will be used to establish Medicare pricing for a two-year period starting January 1, 2026. The Citi analysts noted that although Guardant Health’s management had anticipated the ADLT status during their fourth-quarter earnings call, they had not factored the potential Average Selling Price (ASP) increase into their fiscal year 2025 guidance. The company maintains strong liquidity with a current ratio of 4.68, while delivering impressive revenue growth of 31% in the last twelve months.
The analysts believe that the higher reimbursement rate for Shield, which has been operating at gross margin (GM) break-even prior to this increase, should lead to an improvement in both revenue and GMs for the fiscal year 2025. Management is expected to provide more details on the impact of today’s news at an investor conference later today.
Citi’s commentary suggests that the ADLT status for Shield was largely expected by the market. However, the firm anticipates that Guardant Health’s stock will react positively to the news, considering the potential for an upside to the company’s financial forecasts. The increased Medicare reimbursement rate is seen as a catalyst that could enhance the company’s financial performance in the coming years. Analysts maintain a strong bullish consensus on the stock, with price targets ranging from $47 to $65. Get deeper insights into Guardant Health’s financial health and growth prospects with InvestingPro, which offers exclusive analysis and 10+ additional ProTips for informed investment decisions.
In other recent news, Guardant Health announced that its Shield blood test for colorectal cancer screening has been granted Advanced Diagnostic Laboratory Test (ADLT) status by the Centers for Medicare & Medicaid Services. This designation allows for Medicare reimbursement at the test’s list price of $1,495 for nine months starting April 1, 2025, before transitioning to a market-based rate. The ADLT status is expected to significantly impact Guardant Health’s revenue, with Raymond (NSE:RYMD) James estimating an addition of approximately $14 million, which could accelerate investments in commercial infrastructure.
Guardant Health’s fourth-quarter earnings for 2024 met expectations, driven by growth in clinical and biopharma test volumes, resulting in $4 million in revenue from the Shield test. The company projects this revenue to increase to between $25 million and $30 million in 2025. Analysts at Canaccord Genuity raised their price target for Guardant Health to $60, maintaining a Buy rating, while Morgan Stanley (NYSE:MS) adjusted their target to $52, citing confidence in the company’s market position. Both firms emphasize the potential growth in the company’s core businesses, including the Reveal test for minimal residual disease, which is expected to benefit from expanded reimbursement coverage.
These developments reflect a positive trajectory for Guardant Health, as analysts highlight the company’s strong foundation in therapy selection and advancements in the screening sector.
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