On Tuesday, Piper Sandler updated its financial outlook for Natera Inc . (NASDAQ:NTRA), a healthcare company specializing in genetic testing. Following a review of Natera's recent earnings report, the firm has increased its price target on the company's shares to $120 from the previous $110, while maintaining an Overweight rating.
The firm's decision to raise the price target is based on revised estimates for Natera's future revenue and earnings per share (EPS). According to the updated projections, Natera's 2024 expected revenue and EPS have been adjusted to $1,420 million and -$2.51 respectively, up from the prior estimates of $1,329 million and -$2.30. These figures compare with a consensus of $1,421 million in revenue and -$2.45 EPS.
Looking further ahead, the firm also revised its 2025 revenue and EPS estimates for Natera to $1,669 million and -$1.22 from $1,590 million and -$1.16, against a consensus of $1,666 million in revenue and -$1.19 EPS. For 2026, the estimates have been updated to $1,963 million in revenue and -$0.07 EPS, from the earlier forecast of $1,873 million in revenue and -$0.09 EPS, with a consensus of $1,954 million in revenue and -$0.08 EPS.
The new $120 price target reflects an increase in the expected enterprise value to revenue (EV/Rev) multiple for 2025 to approximately 8.5 times, up from 8.0 times. This valuation is at the higher end of Natera's peer group and above that of Guardant Health (NASDAQ:GH), reflecting expectations of a shorter time frame for Natera to reach cash flow breakeven. The firm justifies this premium valuation by pointing to Natera's higher growth profile compared to its peers.
The price target is also based on the assumption of Natera having $883 million in cash, $440 million in debt, and 121 million shares outstanding. This financial reevaluation signifies confidence in Natera's growth trajectory and its financial performance relative to industry counterparts.
InvestingPro Insights
As Piper Sandler updates its financial outlook for Natera Inc. (NASDAQ:NTRA), it's important to integrate key metrics and insights that can further inform investors. Natera's market capitalization stands at $12.69 billion, reflecting the market's valuation of the company. Despite the lack of profitability in the last twelve months and analysts not expecting profitability this year, Natera's revenue growth is impressive, with a 39.26% increase over the last twelve months as of Q1 2024 and an even more robust quarterly revenue growth of 52.11% in Q1 2024.
InvestingPro Tips suggest that Natera has seen a high return over the last year, with a 102.21% price total return, signaling strong investor confidence. Additionally, the company's liquid assets exceed short-term obligations, indicating a solid financial position for meeting its immediate liabilities. However, with a high Price/Book multiple of 15.98 as of Q1 2024, the stock is trading at a premium compared to its book value, which may be a point of consideration for value-focused investors.
For those interested in a deeper dive into Natera's financial health and future outlook, InvestingPro offers additional tips and metrics. With the use of the promo code PRONEWS24, investors can get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, gaining access to a wealth of data and insights to guide investment decisions. Currently, there are 12 additional InvestingPro Tips available for Natera, which can provide a more nuanced understanding of the company's prospects.
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