On Wednesday, Jefferies maintained a Buy rating on Natera (NASDAQ:NTRA) and raised the stock's price target significantly to $182 from $142. The decision came after Natera's reported earnings surpassed expectations by 22% compared to Street estimates, attributed to robust testing volumes and solid Average Selling Prices (ASPs). The firm also adjusted its full-year guidance upwards by 7%, exceeding Street projections.
The positive outlook is further supported by anticipated improvements in Signatera ASPs and stable women's health ASPs by 2025. Jefferies also highlighted upcoming data readouts for colorectal cancer (CRC) screening and Signatera studies, specifically SWOG 80702 and ALTAIR in CRC, as well as iMvigor011 for Bladder, which are expected in the first quarter of 2025.
The analyst's commentary cited the significant earnings beat and increased guidance as key factors for the optimistic stance on Natera. The firm expects the company's growth trajectory to continue, supported by the strength in its testing services and the potential for further ASP enhancements.
Natera's performance has evidently instilled confidence in Jefferies, with the analyst reiterating the Buy rating and emphasizing the company's strong financial results. The raised price target to $182 reflects the firm's expectation of Natera's sustained momentum and upcoming developments in its product pipeline.
Investors and market watchers will likely keep an eye on Natera's progress, especially as the anticipated data readouts for CRC screening and Signatera approach in the first quarter of 2025. The increased price target and maintained Buy rating by Jefferies signal a positive market sentiment towards Natera's future prospects.
In other recent news, Natera, Inc. has reported a record Q3 revenue of $439.8 million, marking a 64% increase year-over-year. The company also noted a significant rise in oncology test volumes, with 137,000 tests performed, a 54% increase from the previous year.
Notably, gross margins reached a record 62%, and Natera generated $34.5 million in cash. Based on these robust financial results, the company has revised its full-year revenue guidance upwards to between $1.61 billion and $1.64 billion.
In terms of product performance, the Signatera test showed promising results in predicting overall survival and chemotherapy benefits in colorectal cancer, becoming the company's largest revenue-contributing product. The company also reported a strong performance in women's health, including the launch of the Fetal RhD test.
While highlighting recent developments, Natera acknowledged challenges with private payers, particularly in handling prior authorizations and denials. The company also expressed caution for Q4 due to potential holiday-related disruptions. However, with over 100 trials underway, Natera sees significant growth opportunities ahead.
InvestingPro Insights
Natera's recent performance aligns with several InvestingPro insights. The company's stock has shown remarkable strength, with a 178.37% price return over the past year and a 115.71% return year-to-date. This impressive performance is reflected in the InvestingPro Tip noting a "High return over the last year" and that the stock is "Trading near 52-week high."
The company's revenue growth is particularly noteworthy, with a 46.13% increase in the last twelve months and a robust 58.13% growth in the most recent quarter. This strong top-line performance supports Jefferies' optimistic outlook on Natera's testing volumes and ASPs.
However, investors should be aware that Natera is not currently profitable, with a negative operating income of $313.73 million in the last twelve months. This is consistent with the InvestingPro Tip stating that "Analysts do not anticipate the company will be profitable this year."
For those interested in a deeper analysis, InvestingPro offers 12 additional tips for Natera, providing a comprehensive view of the company's financial health and market position.
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