Natera stock holds Buy rating and $195 target from TD Cowen

On Friday, TD Cowen reaffirmed their confidence in Natera (NASDAQ:NTRA), a leader in personalized genetic testing and diagnostics, with a Buy rating and a steady price target of $195.00. According to InvestingPro data, three analysts have recently revised their earnings estimates upward for the upcoming period, with analyst targets ranging from $37 to $210. The endorsement follows Natera’s recent guidance announcement, which has set the stage for a promising year ahead. Analysts at TD Cowen highlighted that the company’s guidance for 2025 was particularly compelling, with sales projections surpassing consensus estimates by approximately 5%.

The positive outlook is supported by a variety of factors that TD Cowen believes will drive the company’s success. These include the potential for increased sales and higher gross margins, as well as strategic operational expenditures, primarily in sales and marketing. The company’s impressive revenue growth of nearly 55% in the last twelve months and current gross margin of 57.66% support this optimistic view. InvestingPro subscribers can access 10+ additional insights about Natera’s growth potential and financial health. The analysts underscored Natera’s robust growth levers, such as the anticipated rise in Signatera’s price and volume, the introduction of new clinical evidence, further adoption of MoLDX (Molecular Diagnostic Services), and the continued expansion of profit margins and cash flow.

Natera’s fourth-quarter performance had already been previously announced to be positive, which laid the groundwork for the 2025 sales guidance to be well-received by the market. The company’s strong momentum is reflected in its remarkable 104.59% stock price return over the past year, though current valuations suggest the stock may be trading above its Fair Value. The midpoint of the 2025 sales forecast, which had been adjusted upwards following the fourth-quarter preannouncement, was met with approval from TD Cowen for being ahead of the consensus.

The company’s strategic spending on operational expenses was noted as a conscious choice to fuel growth, despite the higher costs impacting the gross margin percentage. Nevertheless, the gross margin percentage guidance exceeded expectations, indicating efficient cost management and promising profitability.

In conclusion, TD Cowen remains optimistic about Natera’s trajectory, citing multiple levers for potential upside. These levers, along with a strong sales guide and effective management of operational expenditures, suggest that Natera is well-positioned for another robust year of growth and industry leadership. For a comprehensive analysis of Natera’s financial health, growth prospects, and detailed metrics, investors can access the full Pro Research Report available exclusively on InvestingPro.

In other recent news, Natera reported its fourth-quarter 2024 earnings, surpassing Wall Street expectations with a narrower-than-anticipated loss per share and higher revenue. The company posted an actual EPS of -$0.41, better than the forecasted -$0.49, with revenue reaching $476 million against a predicted $409.89 million. This marks a 53% year-over-year revenue growth, driven by strong demand for its products and improved gross margins, which rose to 63% from 51% the previous year. Additionally, Natera generated $46 million in cash flow during the quarter, continuing its positive financial performance.

Canaccord Genuity has maintained its Buy rating on Natera and increased its price target to $195, up from $180, following the company’s strong quarterly results. The firm’s analysts are optimistic about Natera’s future, citing the company’s initial guidance for 2025, which suggests a year-over-year revenue growth in the mid-20% range. They also highlight potential benefits from improved Medicare Advantage rates and biomarker legislation expected in 2025. Natera’s stock is considered undervalued by Canaccord Genuity, which sees significant upside potential based on the company’s valuation and performance.

Natera has set its 2025 revenue guidance between $1.87 billion and $1.95 billion, indicating a 24% growth at the midpoint. The company plans to continue investing in research and development, particularly in areas like molecular residual disease and early cancer detection. Natera also aims to expand its reimbursement strategies and payer coverage to enhance revenue per test. CEO Steve Chapman described 2024 as a "transformational year" for Natera, emphasizing advancements in molecular diagnostics and expressing optimism about future revenue opportunities.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.