We recently published a list of the 12 Best Diagnostics Stocks to Invest In Right Now. In this article, we are going to take a look at where Natera, Inc. (NASDAQ:NTRA) stands against the other best diagnostics stocks to invest in right now.
Overview of the Clinical Diagnostics Market
According to a report by Mordor Intelligence, the clinical diagnostics market has a size of $88.79 billion as of 2025. It is expected to grow at a compound annual growth rate (CAGR) of 5.48% between 2025 and 2030, reaching $115.94 billion at the end of the forecast period. While North America is the largest market in the domain at present, Asia-Pacific takes the lead as the fastest growing.
As per Grand View Research, the growth in the global clinical diagnostics industry is attributed to the rising demand for lab automation and the development of specialized tests for disease management and early disease detection. In addition, the growing use of point-of-care diagnostics products has also driven a decentralization trend in the healthcare industry.
READ ALSO: 7 Most Undervalued Biotech Stocks To Invest In and 11 Best Pharma Stocks to Buy According to Hedge Funds.
AI in Diagnostics Healthcare: Is A New Trend Emerging?
One of the primary trends emerging in the sector is the growing use of artificial intelligence. AI-powered diagnostic tools are revolutionizing the interpretation of medical images with high accuracy, leading to increased adoption. These tools not only improve disease diagnostics but also allow medical professionals to develop more effective and personalized treatment plans, elevating the overall healthcare experience.
On February 24, GlobeNewswire reported that the US AI diagnostics market was worth around $655 million in 2024, as per estimates by Precedence Statistics. It is expected to grow at a CAGR of 20.7% between 2025 and 2034, reaching $4.29 billion by the end of the forecast period.
On February 4, Eric Lefkofsky, founder and CEO of Tempus AI, appeared on CNBC to talk about the impact of generative AI in diagnostics healthcare, among other things. He was of the view that generative AI and large language models aren’t more impactful in any other avenue as much as they are in healthcare. Diagnostics sit at the center of healthcare, as almost every other major decision a doctor makes is undertaken after ordering some kind of laboratory test. If we can make diagnostics more intelligent, it would be possible to route patients to the best possible and most optimal therapy.
Generative AI is thus allowing access to new tools that help structure and make sense of disparate information and use that information, whether it be physician progress notes, pathology reports, molecular data, CAT scans, MRIs, or others, to make sure that the patients are on the optimal therapy path. He further said that the promise of this technology is twofold: it is enormous in helping patients live better and longer lives while reducing the substantial waste in the US healthcare system. Generative AI is thus significantly impactful in healthcare diagnostics.
Our Methodology
We sifted through stock screeners, financial media reports, and ETFs to compile a list of 20 diagnostics and research stocks. We then selected the top 12 with the highest number of hedge fund holders, as of Q4 2024, and ranked them in ascending order. We sourced the hedge fund sentiment data from Insider Monkey’s database.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A laboratory environment with technicians in lab coats conducting molecular testing services.
Natera, Inc. (NASDAQ:NTRA)
Number of Hedge Fund Holders: 77
Natera, Inc. (NASDAQ:NTRA) is a diagnostics company that develops and commercializes molecular testing services, applying its technological services in oncology, women’s health, and organ health. The company provides various diagnostic tests, including Panorama non-invasive prenatal test (NIPT), Vistara, horizon carrier screening (HCS), spectrum pre-implantation genetic screening and spectrum pre-implantation genetic diagnosis, Anora products of conception (POC), and non-invasive paternity testing (PAT).
2024 was a transformational year for the company, as it ended fiscal Q4 2024 with significant momentum going into 2025. Revenues in the quarter reached $476 million, reflecting a sound 53% year-on-year growth and $4 million above its January pre-announcement of $472 million. Volumes were up 26% compared to fiscal Q4 2023. In addition, gross margins in fiscal Q4 2024 were 63%, significantly higher than the 51% it posted a year ago.
Natera, Inc. (NASDAQ:NTRA) generated around $46 million of cash flow in fiscal Q4 2024, wrapping up the full year with about $86 million in total cash flow generation. It plans to continue this momentum, reinvesting its cash flows in its business in 2025. Management is confident that this approach holds the potential to enhance the company’s growth profile in 2026 and beyond. In addition, the company’s growing market penetration in oncology is expected to support price and volume growth.
Parnassus Growth Equity Fund stated the following regarding Natera, Inc. (NASDAQ:NTRA) in its Q4 2024 investor letter:
“Natera, Inc. (NASDAQ:NTRA), an industry leader in genetic testing for women’s health and cancer recurrence monitoring, reported robust financial results for the third quarter of 2024. The company’s increasing market penetration in oncology and reimbursement by insurance should support continued volume and price growth.
Natera shares rose throughout the year, as the genetic testing company gained market share, improved reimbursement and continued to publish data and gain traction for its cancer recurrence monitoring tests.”
Overall, NTRA ranks 3rd on our list of the best diagnostics stocks to invest in right now. While we acknowledge the potential of NTRA as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than NTRA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.
