On Tuesday, Canaccord Genuity adjusted its outlook on Natera Inc (NASDAQ:NTRA) shares, a leader in personalized genetic testing and diagnostics. The firm raised the price target for Natera's stock to $150 from $145, while reaffirming a Buy rating. The adjustment reflects Canaccord's view that Natera remains a top-tier stock with strong performance prospects.
The analyst at Canaccord Genuity highlighted several upcoming developments that could significantly influence Natera's share price. These include potential updates to reimbursement and guidelines that may favor the company's products such as Panorama, Signatera, and its expanded carrier screening.
The inclusion of Panorama for microdeletion testing, which is added to a majority of the company's non-invasive prenatal tests (NIPT), represents a substantial revenue opportunity if these tests receive payment approval.
Natera is also anticipating top-line data from its ALTAIR trial in approximately January 2025. The trial is part of the CIRCULATE-Japan adaptive trial platform and focuses on the use of the Signatera molecular residual disease (MRD) test for patients with stage II-IV resectable colorectal cancer. The results could influence the National Comprehensive Cancer Network (LON:NETW)'s (NCCN) guideline decisions, which are expected to be discussed in late summer.
The company's I-SPY2 and BESPOKE registry data could further support the inclusion of ctDNA-based MRD testing in major guidelines. Canaccord Genuity believes that despite Natera's past challenges in achieving guideline inclusion, there is now a more optimistic outlook for favorable guidelines in the near future. Such inclusion could accelerate the adoption of Signatera among physicians and increase coverage by commercial payers.
Canaccord Genuity also noted Natera's improvements in gross margins, which are now comparable to its peers, and a quarter of cash flow breakeven, which appears to be sustainable. Despite a valuation multiple that is higher than its peers, the analyst believes that Natera's proven execution abilities and growth potential are not fully appreciated in its current stock price.
In other recent news, Natera, Inc. has made significant strides in the genetic testing sector, with a notable 58% year-over-year and a 12% sequential revenue increase from the first quarter. The company has secured a permanent injunction against NeoGenomics (NASDAQ:NEO)' RaDaR assay, asserting its patent rights within the genetic testing market.
Analysts from Piper Sandler, and TD Cowen have maintained their positive stances on Natera, reiterating their price targets and Buy ratings. These ratings are based on the forthcoming Galaxy study results and Natera's presentation at the European Society for Medical Oncology (ESMO) conference.
Natera's Signatera test is set to change oncological discussions as it moves beyond measuring sensitivity to providing insights on overall survival and disease-free survival. Despite a delay in the submission of the ALTAIR study and the non-renewal of the Foundation Medicine partnership, Natera is projecting a 40% revenue growth compared to 2023.
These recent developments underscore Natera's commitment to growth and innovation in the personalized genetic testing and diagnostics space.
InvestingPro Insights
Natera's recent performance and future prospects align with several key metrics and insights from InvestingPro. The company's revenue growth is particularly impressive, with a 58.13% increase in quarterly revenue as of Q2 2024. This robust growth supports Canaccord Genuity's optimistic outlook and raised price target.
InvestingPro Tips highlight that Natera has shown a "High return over the last year" and a "Strong return over the last three months," which corroborates the analyst's view of Natera as a top-tier stock. The company's stock price has indeed demonstrated significant momentum, with a remarkable 215.5% return over the past year.
However, it is important to note that Natera is "Not profitable over the last twelve months," with a negative operating income of $313.73 million. This aligns with the InvestingPro Tip that "Analysts do not anticipate the company will be profitable this year." Despite this, the market seems to be valuing Natera's growth potential and future prospects, as evidenced by its high Price / Book multiple of 17.85.
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for Natera, providing a deeper understanding of the company's financial health and market position.
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