Piper is optimistic about the future of oncology company Guardant Health. Analyst David Westenberg upgraded Guardant Health from neutral to overweight and maintained his $40.00 price target. This implies a 55% increase in the stock’s value from Tuesday’s closing. Westenberg stated that Guardant Health’s market leadership in liquid biopsies should allow it to sustain growth of 20% for several years. The company has the first FDA approved comprehensive liquid biopsy treatment of all advanced solid tumours. Guardant Health shares increased by about 6%. Stocks have had a tough year, with losses of 5.1% to date. Westenberg wrote Wednesday that while he has a cautious view of Guardant’s screening position, he believes the current valuation reflects how the market views them. We believe there is significant upside potential in the stock, either from a strategic decision, such as a divestment, licensing or commercial partnership. New data may convince investors that commercialization is worthwhile. Guardant Health’s Guardant360 liquid biopsy test was approved by the U.S. Food and Drug Administration (FDA) in January. This test helps to identify patients with advanced or metastatic cancer who have ESR1 mutations. Westenberg stated that this could increase the annual test run rate of the company by tens or thousands of tests. Guardant Reveal, a blood-only liquid biopsy test that detects circulating tumour DNA to assess minimal residual disease (MRD) in early-stage cancers, is another of the company’s technology. Westenberg stated that the company’s growth levers include ESR1, Tissuenext, MRD and international expansion. The analyst does see Guardant as an investment in MRD over the long term. He stated that even though Guardant would be able generate meaningful data, and have more samples to train their AI algorithms than any other competitor, he still prefers the clinical genetic testing company Natera for MRD treatment in the next five-years.
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