QS Research · Michael Burry's Scion Capital analyst template · 2006
Natera, Inc. (NTRA)
As of 2026-11-06 · 12/15 boxes filled from SEC filings and market data
Conclusion: SHORT
Conviction medium · base case -38% · downside -49% · upside +8%
Section 13 anchors on today's 15.14x sales, but with TTM EBIT of -$260.4M (N12), net income of -$164.7M (N14) and a 0.1% FCF yield (N24), that is a price rather than an earnings-based value; I keep its $2.91B TTM revenue base (N11) and apply a 9.4x sales multiple, the midpoint of profitable comps CDNA 7.56x and BLLN 11.21x (S1). That gives $27.31B EV + $0.86B net cash = $28.17B equity, or ~$194/share, -37.5% from $310.67 (N1). Downside at CDNA's 7.56x is ~$158 (-49%), upside at Guardant's 16.47x is ~$336 (+8%) (S1). The market is paying a top-of-peer-group sales multiple for a still loss-making lab with thin FCF and persistent dilution; the call is short.
Key numbers
- Share price: $310.67
- Market cap: $45.05B
- Latest financial period: TTM to Sep 30, 2026
- Revenue (TTM): $2.91B
- Price / book: 24.10x
The 15 boxes
- ✓ 1. Long-form business notes
Natera is a cfDNA diagnostics company that sells laboratory tests, almost entirely product revenue ($2,295.8M of $2,306.1M total in FY2025), reimbursed by Medicare and commercial payers and run in its own CLIA labs or licensed to partners through its Constellation cloud software. Revenue went from $391.0M (FY2020), when Panorama and Horizon were the significant majority of revenue, to $2,306.1M (FY2025) on ~3.5M tests, with oncology (Signatera MRD) now the lead growth engine alongside women's health and organ health. Cash generation has inflected — operating cash flow +$215.3M in FY2025 vs -$182.5M in FY2020 — but the GAAP operating loss widened to -$309.9M in FY2025 from -$222.3M in FY2024, so the business is cash-generative, not GAAP-profitable.
- ✓ 2. Competitive advantage
Natera has scale but no demonstrated durable advantage in its returns: operating income was negative in every year FY2020-FY2025 (worst -$541.0M in FY2022, -$309.9M in FY2025 after -$222.3M in FY2024) on revenue of $2.31B in FY2025, with a $2.8B accumulated deficit at 12/31/2025. The only improving line is cash: operating cash flow was +$135.7M in FY2024 and +$215.3M in FY2025 after being negative in FY2020-FY2023. The company claims differentiation from core technology, clinical data, commercial teams and user experience, and holds over 650 issued or pending patents, but it competes with Labcorp, Quest, Illumina/Verinata, Myriad, BillionToOne, Fulgent, Revvity and BGI in NIPT, Guardant/Tempus/Exact/Caris in oncology and CareDx in organ health, and its own filings say its price premium over competing tests is not assured.
- ✓ 3. 10-Q takeaways
Q3 2026 revenue was $794.0 million, up 34.1% year over year, with reported units up 23.0% and ASP up 8.8%; nine-month revenue was $2,243.4 million, up 36.7%. Product cost as a percent of product revenue was 35.4% in Q3 2026 versus 35.1% in Q3 2025, and the company still posted a Q3 operating loss of $68.3 million and net loss of $59.9 million. Cash was $1.1 billion at 2026-09-30 and nine-month operating cash flow was $138.9 million, helped by a $145.6 million prior-period change in revenue estimate. The 10-Q gives no buyback detail or formal revenue/EPS guidance, and the risk-factor update source contains only the Item 1A heading.
- ✓ 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.
Sign in with a QuantSignals Premium or Gold plan to read every box: each point linked to the SEC filing it came from, the bull and bear case, and the comparables. QS Research powers the signals behind FST, our autonomous trading agent.