QS Research · Michael Burry's Scion Capital analyst template · 2006
Guardant Health, Inc. (GH)
As of 2026-11-11 · 12/15 boxes filled from SEC filings and market data
Report price $155.35 (close 2026-11-10)
Conclusion: PASS
Conviction low · base case +7% · downside -38% · upside +34%
Guardant is a genuine growth story — Q3 2026 revenue +36% to $361.0M, Shield volume +246%, FY2026 guidance raised to $1.36–1.37B — but it has no earnings: TTM EBIT -$504.0M, net income to common -$485.1M, FCF -$232.1M, ROIC -102.4% against a 10.3% WACC. At 16.81x EV/Sales (on GAAP EBITDA (TTM) it has no meaningful multiple at all) it is the most expensive name in its peer table, above NTRA at 15.20x despite NTRA's $2.91B revenue versus GH's $1.28B. On the code's cases the peer-median EV/Sales of 2.17x (8 peers in the comps table) anchors the base case at +6.9%, about $166 a share; the downside — 9.9x EV/Sales, halfway from today's 16.8x toward the market anchor and at least 15% below today's, plus a $0.01-a-share exposure stress — is about $96 (-38%); and the upside — holding today's premium multiple on one more year of +32.9% growth — is about $208 (+34%). That is a reward/risk of 0.89:1, not the asymmetry a buyer wants. With a -$232.1M cash burn funded by +7.3% annual dilution, a 0/100 value score and a crowded short (7.0% of shares, 5.4 days to cover), the call is a pass on low conviction — caution on valuation, not a short on the business.
Key numbers
- Share price: $155.35
- Market cap: $21.02B
- Latest financial period: TTM to Sep 30, 2026
- Revenue (TTM): $1.28B
- FCF yield: -1.1%
- Revenue growth (latest fiscal year): +32.9%
- ROIC (TTM): -102.4%
- WACC: 10.3%
- Economic profit spread: -112.8 pts
The 15 boxes
- ✓ 1. Long-form business notes
Guardant Health sells blood and tissue precision-oncology tests to clinical and biopharmaceutical customers, with products spanning therapy selection, MRD/therapy response monitoring and colorectal cancer screening, plus data offerings. Revenue rose to $982.0M in FY2025 and $1.28B TTM to 2026-09-30, but operating income and net income to common remain negative and operating cash flow is still negative. The oldest FY2020 report shows a narrower Guardant360/LUNAR development portfolio; the latest report shows an FDA-approved Shield colorectal cancer screening test, expanded Guardant Reveal, Smart Platform and broader biopharma data products.
- ✓ 2. Competitive advantage
The sources describe a scaled liquid-biopsy testing business with a patent portfolio around digital sequencing and some customer switching friction, but the margin/return record does not show a durable cost or pricing advantage: operating income is negative in every period in the XBRL table and operating cash flow is negative for FY2025 and TTM to 2026-09-30. Competition is broad across therapy selection, MRD, early screening and NGS platforms, and payer/reimbursement terms and test concentration weaken pricing power. I would call the moat narrow and unproven, resting more on patents and switching friction than on demonstrated economics.
- ✓ 3. 10-Q takeaways
Q3 2026 (quarter ended 2026-09-30) revenue was $361.0M, up 36% year over year, with Oncology $231.3M (+25% on 117,000 tests vs ~74,000), Screening $67.6M (+180% on 83,000 Shield tests vs 24,000) and Biopharma & Data $59.0M (+8%); nine-month revenue was $997.6M, +42%. GAAP gross margin held at 65% (non-GAAP 67% vs 66%), but GAAP loss from operations widened to $(132.8)M from $(99.0)M on sales-and-marketing (+39%) and G&A (+71%, including $22.6M more legal expense), while non-GAAP net loss narrowed to $(38.8)M and adjusted EBITDA loss to $(37.3)M. Cash was $1.1B at 2026-09-30 and Q3 free cash flow was $(37.2)M; management raised FY2026 revenue guidance to $1.36–1.37B (38%–40% growth) while raising the free-cash-flow burn outlook to $205–220M.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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