Natera: Overdue For A Breather

seekingalpha06-03

Today, we look at Natera, Inc., a diagnostic and molecular testing services company that has seen its stock rise over 150% since late October.The company achieved cash flow break even status in the ...

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The stock is one of the best performing equities in the market in recent quarters and is up more than 150% since the end of the overall market swoon in late October of 2023. Can the good times continue for shareholders, or are the shares overdue for at least a breather?","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"LU1861558580.USD":"日兴方舟颠覆性创新基金B","LU0971096721.USD":"富达环球金融服务 A","LU1074936037.SGD":"JPMorgan Funds - US Value A (acc) SGD","IE00BKVL7J92.USD":"Legg Mason ClearBridge - US Equity Sustainability Leaders A Acc USD","LU1668664300.SGD":"Blackrock World Financials A2 SGD-H","BK4585":"ETF&股票定投概念","BK4534":"瑞士信贷持仓","BK4139":"生物科技","LU1861559042.SGD":"日兴方舟颠覆性创新基金B SGD","LU0098860793.USD":"FRANKLIN INCOME \"A\" INC","LU1989772840.SGD":"CPR Invest - Climate Action A2 Acc SGD-H","NTRA":"Natera, Inc.","BK4588":"碎股","LU0266013472.USD":"AXA WF - Framlington Longevity Economy A Cap USD","LU1989772923.USD":"CPR Invest - Climate Action A2 Acc USD-H","LU1162221912.USD":"FRANKLIN INCOME \"A\" (USD) ACC","EXAS":"精密科学","LU0320765646.SGD":"FTIF - Franklin Income A MDIS SGD-H1","BK4581":"高盛持仓","IE00BZ1G4Q59.USD":"LEGG MASON CLEARBRIDGE US EQUITY SUSTAINABILITY LEADER \"A\"(USD) INC (A)","BK4504":"桥水持仓","LU0053671581.USD":"摩根大通美国小盘成长股 A(dist)","LU1363072403.SGD":"Fidelity Global Financial Services A-ACC-SGD","LU0106831901.USD":"贝莱德世界金融基金A2","BK4548":"巴美列捷福持仓","BK4127":"投资银行业与经纪业"},"translate_title":"Natera：该喘口气了","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"NTRA":1,"EXAS":1},"content_text":"Today, we look at Natera, Inc., a diagnostic and molecular testing services company that has seen its stock rise over 150% since late October.The company achieved cash flow break even status in the first quarter ahead of schedule as Natura delivered outstanding Q1 results.The question is whether the stock can continue to rally now being valued at over nine times forward sales or if the equity is overdue for a breather.An analysis around Natera follows in the paragraphs below.SolStock/E+ via Getty Images Today, we are putting diagnostic and molecular testing services concern Natera, Inc. (NASDAQ:NTRA) in the spotlight. The stock is one of the best performing equities in the market in recent quarters and is up more than 150% since the end of the overall market swoon in late October of 2023. Can the good times continue for shareholders, or are the shares overdue for at least a breather? An analysis follows below. Seeking Alpha Natera, Inc. is headquartered in Austin, TX and has numerous testing products on the market. These include Panorama, described as 'a non-invasive prenatal test that screens for chromosomal abnormalities of a fetus, as well as in twin pregnancies' as well as Signatera. This is a ctDNA blood test for molecular residual disease assessment and surveillance of disease recurrence in patients which have been previously diagnosed with cancer. The company is primarily focused on oncology and women's health as well as organ health. The stock currently trades just above $105 a share and sports an approximate market capitalization of $13.1 billion. First Quarter Results: Natera posted its Q1 numbers on May 9th. The company delivered a GAAP loss of 56 cents a share, which was better by more than 15 cents a share compared to analyst consensus expectations. Revenues rose just over 52% on a year-over-year basis to just under $368 million, which beat the consensus by more than $50 million. Natera processed 735,800 tests in Q1, which was up by more than 17% sequentially from 4Q2023. Oncology focused tests (114,800) rose more than 61% from 1Q2023. Some other key data factoids from the Q1 earnings report include gross margins bursting up to 56.7% compared to 38.7% from the same period a year ago. Signatera (launched in 2017) drove almost all of the testing volume, it should be noted. May Company Presentation Based on the strong first quarter, management raised key metrics around FY2024 guidance significantly (see below). May Company Presentation Analyst Firm Reactions & Balance Sheet Status: The analyst community was quite impressed with first quarter results. Since Q1 numbers hit the wires, 11 analyst firms including Morgan Stanley, JPMorgan and Goldman Sachs have reissued/assigned Buy/Outperform ratings on the stock. Price targets proffered range from $114 to $142 a share. Of note, there was a bit of a burst of insider selling directly following the posting of first quarter numbers, with several insiders disposing of nearly $7.5 million worth of equity collectively since then. Natera ended the first quarter with just over $880 million in cash and marketable securities, according to the 10-Q filed for the quarter. Natera has just over $280 million of convertible senior notes and some $80 million drawn on a UBS line of credit as of the end of the quarter as well. It should be noted that Natera achieved cash flow breakeven status in the first quarter, ahead of expectations. May Company Presentation Conclusion: Natera, Inc. had a loss of $3.78 a share in FY2023 on $1.08 billion in revenues. The current analyst firm consensus is that losses will be cut to just less than $2.50 a share in FY2024 as sales advance by more than 30% to $1.44 billion. The project losses to be just under $1.20 a share in FY2025 on sales growth in the high teens. It is hard to quibble with Natera's recent execution, it has been outstanding, and the company is on track to be right at cash breakeven for FY2024. This is a commendable achievement. That said, these results seemed to have been fully rewarded by an over 150% rally in the stock since late October. Natera is not likely to be profitable on a GAAP basis until FY2026, and the shares are priced at over nine times forward sales. Sales growth will also slow in FY2024 compared to FY2023 and FY2025 compared to FY2024 as Natera grows off a bigger base. Oncology testing concern Exact Sciences Corporation (EXAS) which is seeing consistent revenue growth in the low to mid-teens is valued at just three times forward revenues in ways of valuation comparison.  The shares of Natera appear at least fully valued at current trading levels, and I would wait for a significant pullback in the equity before initiating a position. Therefore, the stock seems to be an 'Avoid' until then, despite applaudable recent results.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.24.0","shortVersion":"4.24.0","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2440536490"}