Guardant Health Earnings: Strong Volume Growth; Guidance Revised Upward

Guardant Health's results were better than our expectations. Revenue for the three months was $177 million, or 40% year-on-year growth, and gross profit margin was 59%, or 2 percentage points better than the same period last year. The no-moat company increased its full-year guidance to 22%-24% revenue growth (excluding revenue from screening sales), which is considerably higher than the previous expectation of about 17.5% growth. We maintain our $47 fair value estimate and think shares are undervalued. However, its key pipeline products are far from derisked, and we estimate Guardant is still four years from profitability, even if its Shield test is ultimately included in the cancer screening guidelines and becomes broadly covered by commercial payers.