On Thursday, UBS has increased the stock price target for Natera (NASDAQ:NTRA), a leader in non-invasive genetic testing and analysis, to $104 from the previous target of $70, while retaining a Buy rating on the company's stock.
The adjustment reflects UBS's optimism about Natera's growth potential, particularly in the area of minimal residual disease (MRD) testing and its established presence in reproductive health diagnostics.
The firm's positive stance is based on Natera's recent performance, which surpassed preannounced figures. A notable achievement highlighted was the significant clinical volume of approximately 98,000 Signatera tests in the fourth quarter.
Moreover, the average selling price (ASP) for tests was higher than expected, reaching $509, which represents an increase from the $461 initially estimated by UBS. This rise in ASP is attributed to the stable pricing within the Women's Health segment and a higher price point, around $1,000, for the Signatera test.
Natera's financial health also showed promise, with organic gross margins exceeding expectations at 49%, compared to the 45% forecast by UBS. This improvement in margins was driven by the growth in ASP and ongoing cost of goods sold (COGS) enhancements. Despite these positive developments, Natera experienced a cash burn of approximately $61 million in the fourth quarter.
Looking ahead, UBS anticipates significant data readouts in the coming months. The ALTAIR trial, which evaluates the Signatera test for colorectal cancer (CRC), is expected to release top-line results in the third quarter of 2024, with a full data publication potentially available by the end of the year.
In addition, two early cancer detection study results are projected to be announced in the second and third quarters of 2024, which could further influence Natera's market position and financial performance.
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