What happened
With a stock down nearly 50% over the last 52 weeks, investors in Guardant Health (GH +5.44%) haven't had a lot to cheer about this year. The last couple of days, however, may be changing that.
This morning, an endorsement from investment bank Bernstein sent shares of the precision oncology company shooting 4.7% higher through 10:35 a.m. ET. Combined with an even stronger rise from an unrelated analyst upgrade yesterday, this means Guardant shares have now risen more than 12% total over two days of trading.
NASDAQ: GH
Key Data Points
So what
As The Fly reports, Bernstein initiated coverage of Guardant with an outperform (i.e., buy) rating and a $34 price target, citing the company's high and growing levels of recurring revenue (helped by a "locked-in" customer base), high profit margin on that revenue, and strong growth prospects.
This echoes a sentiment expressed by fellow investment banker Piper Sandler yesterday, which upgraded the stock and predicted that Guardant will maintain 20% growth rates "for a number of years."
Best of all (for new investors at least), Guardant shares have suffered a steep 27% stock sell-off over the past month, providing new investors an attractive entry point to the stock today.
Now what
Curiously, there hasn't been any really bad news pulling down Guardant stock this month -- other than the overall unhappy state of the economy, with inflation and high interest rates looking more likely to persist and therefore depressing demand for growth stocks like Guardant.
The company's most recent earnings report, which predated the stock's sell-off by nearly a full month, showed revenue growth chugging right along at a brisk 26% rate, and Guardant forecast full-year growth in the 21% to 22% range (all numbers above Piper's prediction for future years). The number of tests performed for Guardant's clinical customers in particular grew at an even stronger 49% rate last quarter.
Granted, Guardant stock still isn't profitable, nor free-cash-flow-positive. Granted, too, free cash flow isn't expected to turn positive before 2027, nor earnings until 2028. But at least Guardant's still growing. Combined with the analyst endorsements, that may give investors some confidence about the future.
