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It's been a mediocre week for Guardant Health, Inc. (NASDAQ:GH) shareholders, with the stock dropping 13% to US$75.79 in the week since its latest full-year results. Revenues were a bright spot, with US$214m in sales arriving 3.9% ahead of expectations, although statutory earnings didn't fare nearly so well, recording a loss of US$0.84, some 5.0% below consensus predictions. Following the result, analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what analysts are expecting for next year.
Taking into account the latest results, the current consensus from Guardant Health's seven analysts is for revenues of US$282.7m in 2020, which would reflect a major 32% increase on its sales over the past 12 months. The statutory loss per share is expected to greatly reduce in the near future, narrowing 96% to US$1.63. Before this latest report, the consensus had been expecting revenues of US$273.2m and US$1.32 per share in losses. So it's pretty clear analysts have mixed opinions on Guardant Health after the latest results; even though they upped their revenue numbers, it came at the cost of a pretty serious reduction to per-share earnings expectations.
Spiting the revenue upgrading, the average analyst price target fell 9.8% to US$113, clearly signalling that higher forecast losses are a valuation concern. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Guardant Health, with the most bullish analyst valuing it at US$135 and the most bearish at US$85.00 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
It can also be useful to step back and take a broader view of how analyst forecasts compare to Guardant Health's performance in recent years. It's pretty clear that analysts expect Guardant Health's revenue growth will slow down substantially, with revenues next year expected to grow 32%, compared to a historical growth rate of 61% over the past three years. By way of comparison, other companies in this market with analyst coverage, are forecast to grow their revenue at 6.5% next year. Even after the forecast slowdown in growth, it seems obvious that analysts still thinkGuardant Health will grow faster than the wider market.
The Bottom Line
Pleasantly, analysts also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider market. Analysts also downgraded their price target, suggesting that the latest news has led analysts to become more pessimistic about the intrinsic value of the business.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Guardant Health going out to 2024, and you can see them free on our platform here..
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