Why Guardant Health Is Roaring Higher Today
What happened
Shares of Guardant Health (NASDAQ: GH), a leading provider of liquid biopsies that are used to detect cancer, jumped 12% as of 10:05 a.m. EDT on Wednesday. The double-digit move is a response to the release of expectation-topping fourth-quarter results and upbeat guidance.
So what
Here's a look at the headline numbers from the fourth quarter:
- Revenue jumped 64% to $32.9 million. That easily surpassed the $24.6 million that Wall Street had expected.
- Gross margin expanded by 330 basis points to 57.6%.
- Net loss was $25.1 million, or $0.30 per share. This figure was lower than the $0.36 per share net loss that analysts were modeling.
- Cash balance at year-end was $496.5 million.
Zooming out to the full year, here's how the company performed in 2018:
- Revenue grew 82% to $90.6 million. This figure blasted past management's guidance range of $82 million to $84 million.
- Gross margin soared from 36.6% in 2017 to 52.3% in 2018.
- Net loss declined by 4% to $85.1 million, or $2.80 per share
Management expects that the company's strong growth will continue into 2019:
- Revenue is expected to land between $130 million and $135 million. This would mark growth of 43% to 49% and is far higher than the $117 million that Wall Street was expecting.
- Net loss is expected to widen to a range of $126 million to $129 million. That's a sizable jump from the $85.1 million net loss in 2018.
The blowout quarterly results and bullish guidance are prompting traders to bid up this red-hot stock once again.
Now what
Guardant recently announced encouraging results from its Nile study. This trial was designed to compare the accuracy of its Guardant360 liquid biopsy product with current standard-of-care tissue-based testing methods in detecting biomarkers in patients with non-small-cell lung cancer. The results showed that Guardant360 was just as effective at detecting genomic biomarkers as tissue-based testing. That's big news since the Guardant360 test is faster, cheaper, and far more patient-friendly than current testing methods.
Guardant Health has already been a home run for early investors, and for good reason. Revenue and margins are on the rise and the company is an early leader in a market poised for massive growth.
Overall, there are plenty of reasons for investors to believe that this company's growth engine is just getting warmed up.
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Brian Feroldi has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Guardant Health. The Motley Fool has a disclosure policy.