Natera stock rocketed to a three-year high Friday, buoyed by a "robust beat-and-raise" and its first-ever quarter of positive cash flow.
The company sells genetic tests to detect cancer, as well as for women's and organ health. The March quarter benefited from increases in test volume and average selling price for tests in the women's health and cancer detection spaces, Canaccord Genuity analyst Kyle Mikson said in a report to clients.
"We are blown away by Natera's start to 2024, and believe there is further upside to the shares given, in our view, the company conservative guidance update," he said.
On today's stock market, Natera stock soared 10.2% to close at 105.29. That put shares at their highest point since late 2021.
Natera Stock: Mighty Sales Beat
Across all products, Natera's revenue surged 52% to $367.7 million, handily beating forecasts for $316.3 million, according to FactSet. Losses came in at 56 cents per share, ahead of expectations for a wider 71-cent loss. In the year-ago period, Natera lost $1.23 a share.
Notably, Natera notched $3 million in cash flow. That was several quarters ahead of Natera's projections, Mikson said.
The company says it processed about 735,800 tests in the first quarter, up 17.5% year over year.
Hiked Guidance For 2024
Given the strong quarter, Natera raised its outlook for the year. The company now expects $1.42 billion to $1.45 billion in sales this year. Natera stock analysts called for a lower $1.4 billion in sales. Mikson says Natera could still outdo that forecast.
"We believe the updates are highly conservative and position Natera well for additional upward revisions in the near term," he said. "Increases to (average selling prices) appear to be an obvious potential tailwind, recognizing multiple catalysts exist."
Mikson kept his buy rating on Natera stock and hiked his price target by 30 to 130.
Regulators could also expand the guidelines on screening parents-to-be for chromosomal microdeletions. These can cause myriad development disorders for children. Expanded carrier screening guidelines would benefit companies like Natera, which makes noninvasive prenatal tests, or NIPT.
"We believe Natera remains undervalued and a stock to focus on," Mikson said.
Natera stock has a strong Relative Strength Rating of 96. This means shares rank in the leading 4% of all stocks when it comes to 12-month performance, according to IBD Digital.
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
