Guardant Health is Monday's IBD Stock Of The Day. Shares broke out of a cup base as enthusiasm builds for the company's multi-cancer detection blood test.
This month, Guardant launched Shield as a means of detecting multiple types of cancer via a simple blood test. The company expects at least $500 million in annual revenue from Shield by 2028.
"We view this target as solid, as it does not account for USPSTF guideline inclusion," Canaccord Genuity analyst Kyle Mikson said in a report. USPSTF, or the U.S. Preventive Services Taskforce, makes recommendations on which preventive tests and services should be covered by Medicare.
On the stock market today, Guardant Health shares rose 7.2%, closing at 70.20. That put shares in a buy zone from a cup base with an entry at 68, according to MarketSurge. Shares first broke out on Thursday after rival Grail said Samsung has invested $110 million in its multi-cancer detection test.
Expanded Shield Uses
Guardant Health is an expert at finding cancer. Shield, its best-known product, got its start as a means of detecting the DNA fragments consistent with colon cancer in the blood. It rivals a stool test called Cologuard from Exact Sciences.
Guardant is expanding Shield into other uses. Shield MCD, or multi-cancer detection, will be an added option for doctors ordering Shield for colorectal cancer screening.
"Physicians opt in to receive the MCD report, and patients authorize release of medical data," William Blair analyst Andrew Brackmann said in a client note. "Management believes the latter is an 'exchange of value' between the parties and the company does not intend to seek reimbursement for the MCD report over and above the reimbursement provided by Shield CRC."
The reimbursement rate remains $1,495, Canaccord's Mikson said. The strategy could prove valuable, according to Brackmann, who said it gives Guardant Health access to rich medical data for, presumably, asymptomatic patients with an average risk of developing cancer. "But with many hurdles to adoption for MCD tests, we are not yet at the point of saying this approach is thesis-changing on Shield," he said. "That may be a few, or even many, years away."
Still, Brackmann rates Guardant Health stock an outperform.
'Impressive' Investor Day
Canaccord's Mikson notes multiple catalysts ahead for Guardant Health.
The company has asked the Food and Drug Administration to sign off on its Guardant360 Liquid, a blood test that determines which genetic mutations are driving a patient's cancer. The information helps doctors make better decisions about how to proceed with treatment.
Guardant is also planning to launch the Reveal Ultra MRD test in the near term. This test would look for circulating tumor DNA in patients' blood following treatment. The presence of tumor DNA, even before a tumor shows up on a traditional scan, suggests a patient is going to have a relapse.
It also plans to offer Guardant Reveal for therapy monitoring in the fourth quarter of this year.
"In our view, GH remains a stock to focus on after an impressive investor day highlighting compelling growth potential," Mikson said.
Guardant Health Stock Rally
During the second quarter, Guardant posted $232.1 million in sales, marking 31% growth. The company noted it shipped about 16,000 Shield screening tests.
Shares dropped nearly 7% on Sept. 4 after the company unveiled lackluster test results for the second version of Shield. The second version had a lower-than-expected sensitivity and specificity. These are measures for how well a test can detect positive instances of cancer and rule out negative instances.
That drop helped form the left side of the current cup base. After dropping to a low at 53.40 on Sept. 16, Guardant Health stock is 31% as of Monday's close.
Shares have a strong IBD Digital Relative Strength Rating of 95, meaning Guardant Health stock ranks in the leading 5% of all stocks in terms of 12-month performance. Guardant Health stock also ranks 40th on the IBD 50 list of elite growth stocks.
Follow Allison Gatlin on X/Twitter at @AGatlin_IBD.
