Guardant Health, Inc. (GH) is poised for long-term growth as its revenue projections and R&D spending paint a growth story consistent with some of the best names in the industry. The healthcare firm, headquartered in Palo Alto, California, and founded in 2012, is a precision oncology company dedicated to blood-based genomic testing for cancer. Guardant Health is a pioneer in the area of liquid biopsy, a blood-based test for cancer that can identify most genomic alterations from myriad solid tumors. This capability is especially relevant for tracking treatment responses and detecting residual disease.
Guardant Health’s core offerings are the Guardant360, Guardant OMNI, and Guardant Reveal tests. These tests identify genomic changes that are present in the tumors from simple blood draws and help oncologists make treatment decisions. It derives its revenue from testing charges levied on third-party insurance companies and drug developers, as well as via firm partnerships to accelerate and fortify the development of drugs.
The behemoth serves a diverse clientele, ranging from oncologists and healthcare providers to pharmaceuticals, especially for research and treatment of cancer. It mainly works with people affected by cancer, but especially those who are either in treatment or in follow-up for recurrence. GH provides a unique opportunity that impacts care for patients by providing important genomic information and supporting research activities to develop targeted treatments for cancers.
One cannot overlook the long-term opportunities, related to the emphasis on innovation and rapid growth of liquid biopsy. Guardant is not just innovating but redefining cancer diagnostics with AI-driven genomic and epigenomic sequencing of an accuracy higher than that possible with traditional methods. This would make it uniquely poised to corner a market expected to grow from $8.01 billion in 2023 to $58.64 billion by 2032, at a CAGR of 25.3%.
The financial growth prospect is no less exciting for Guardant: revenue growth is expected at 17% yearly, while EPS and earnings are projected to improve 24.9% and 27.5% per year in the next three years. This should be enough to enable the company to gain profitability on its own, with R&D beginning to yield meaningful returns. Furthermore, the company’s attainment of key FDA approvals reiterates the credibility of its technology and puts it in good stead for increased adoption in a rapidly accelerating market.
I am bullish on Guardant Health and here is why: though the short-term prospects might face profitability challenges, strategic spending on R&D manifests a commitment to future growth by Guardant, whose spending is up by 33x in less than a decade. It is a long-term story in every sense, and patient investors could see big returns as this powerhouse capitalizes on market leadership and the innovation edge.
Guardant Health, Inc. ranks 1st on our latest list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 28 hedge fund portfolios held GH at the end of the second quarter which was 29 in the previous quarter. While we acknowledge the potential of GH as a leading AI investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as GH but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.
