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Guardant Health (GH) to Report Q2 Earnings: What's in Store?

Zacks Equity Research

On Oct 4, 2018, Guardant Health, Inc. GH went public through an initial public offering and started trading on the Nasdaq under the ticker symbol of GH.

In the first quarter of 2019, Guardant Health delivered a positive earnings surprise of 14.29%. Moreover, the company has surpassed earnings estimates in two of the trailing four quarters, the average negative surprise being 179.34%.

Shares of Guardant Health have skyrocketed 157.9% so far this year, outperforming the industry’s growth of 0.1%.

Let’s see, how things are shaping up for this announcement.

Factors to Consider

Guardant Health’s top line mainly comprises revenues generated from its Precision oncology testing and development services. The company’s liquid biopsy-based Guardant360 and GuardantOMNI tests are designed for advanced-stage cancer patients, using its LUNAR-1 and LUNAR-2 programs for minimal residual disease/recurrence monitoring and an early detection screening, respectively.

In April, Guardant360 was added as a covered benefit for the members of the health plans associated with eviCore. This test will be considered medically necessary to assist in selecting therapy for patients with advanced lung cancer. As a result, Guardant360 will have added coverage for more than 38 million lives. The company is thus seeing significant increases in Guardant360 coverage in advanced non-small cell lung cancer and also making progress in expanding coverage to other tumor types. We expect the company to provide an update on it during the second-quarter 2019 earnings call.

In April 2019, at the American Association for Cancer Research (AACR) annual meeting, the company presented exploratory data regarding the use of its LUNAR assay for potential screening applications in a cohort of 229 recently-diagnosed colorectal cancer patients and aged-matched cancer-free controls. This data demonstrated average LUNAR assay sensitivity exceeding 80%, with a specificity of 94% for patients with stage I/II colorectal cancer in this cohort (76% in stage I and 87% in stage II). To further pursue this potential market opportunity, the company is planning to start a prospective colorectal screening study of more than 10,000 patients. We expect the company to provide an update on this during the upcoming earnings announcement.

In April, the company concluded the acquisition of Bellwether Bio, a privately held company focused on improving oncology patient care through their pioneering research. . The addition of the Bellwether technology and team will enhance Guardant Health’sefforts, as the latter continues to advance its LUNAR program.

The company is encouraged by the strong growth across its business. As a result, during its first-quarter earnings call, the company raised its  revenue guidance for 2019 to $145-$150 million, up from previous previous forecast of $130-$135 million. This reflects year-over-year growth of 60-65%.

Earnings Whispers

The proven Zacks model does not conclusively show that Guardant Health is likely to beat on earnings this reporting cycle. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as you will see below.

Earnings ESP: Guardant Health has an Earnings ESP of -2.94%. This is because the Most Accurate Estimate is pegged at a loss of 35 cents and the Zacks Consensus Estimate is pegged at a loss of 34 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Guardant Health, Inc. Price and Consensus

Guardant Health, Inc. Price and Consensus

Guardant Health, Inc. price-consensus-chart | Guardant Health, Inc. Quote

Zacks Rank: Guardant Health has a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

We caution against the Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks That Warrant a Look

Here are a few healthcare stocks worth considering, as our model shows that these have the right mix of elements to beat estimates this time around.

Regeneron Pharmaceuticals, Inc. REGN has an Earnings ESP of +6.25% and a Zacks Rank #3. The company is scheduled to release second-quarter 2019 results on Aug 6.

Gilead Sciences, Inc. GILD has an Earnings ESP of +2.41% and a Zacks Rank #2. The company is scheduled to release second-quarter 2019 results on Jul 30.

Allergan plc. AGN has an Earnings ESP of +3.87% and a Zacks Rank #3.

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