Last Update 07 Feb 26

Fair value Increased 9.59%

NTRA: Molecular Residual Disease Leadership And FDA Progress Will Shape Future Outlook

Analysts have raised their fair value estimate for Natera to about $257 from roughly $235, citing higher assumed revenue growth, improved profit margins, and Street research that highlights the company as an established diagnostics player with a strong position in molecular residual disease, along with multiple recent price target increases up to $300.

Analyst Commentary

Recent Street research has been broadly constructive on Natera, with several bullish analysts lifting their price targets and emphasizing the company’s role in diagnostics and molecular residual disease. At the same time, the higher targets and premium framing also imply execution expectations that investors should keep in mind.

Bullish Takeaways

Multiple bullish analysts have raised price targets into the US$220 to US$300 range, which signals confidence that Natera’s current execution can support a higher valuation than previously assumed.
Natera is being characterized as an established diagnostics player with a strong position in molecular residual disease, which bulls see as a core pillar for potential long term growth in testing volumes and revenue mix.
Coverage initiations with premium oriented language suggest some analysts view Natera as warranting higher valuation multiples relative to parts of the diagnostics group, tied to its perceived growth runway and MRD exposure.
References to Q4 previews and sector outlooks that expect solid results are being used by bullish analysts as context for adjusting targets across diagnostics, with Natera grouped among companies they see as well positioned within the sector.

Bearish Takeaways

The cluster of higher price targets into a relatively tight band implies that a meaningful portion of the bullish case, including expectations for continued strong execution, may already be reflected in analyst models.
Premium multiple language cuts both ways, as it implies less room for error around revenue growth, margin progress, and MRD adoption than for peers that are not framed as premium stories.
References to Natera as one of the more attractive organic growth stories in diagnostics raise the bar for future quarters, creating potential downside risk if reported trends or updated outlooks do not align with these expectations.
Investors should recognize that most of the commentary cited is skewed positive, so the range of independent skeptical views may not be fully captured in these target changes and ratings.

What's in the News

Natera submitted a premarket approval application to the FDA for Signatera CDx in muscle invasive bladder cancer, supported by phase 3 IMvigor011 data showing benefits of Signatera guided therapy, with results featured at the ESMO Congress and in The New England Journal of Medicine (Key Developments).
The company issued unaudited guidance for Q4 2025 and full year 2025, indicating expected total revenues of about US$660 million for the quarter and about US$2.3 billion for the year, with Q4 revenues excluding true ups above US$600 million (Key Developments).
Natera and NVIDIA entered a collaboration to combine Natera's multimodal oncology datasets and AI models with NVIDIA's computing platforms, targeting faster bioinformatics workflows and large scale medical AI model training (Key Developments).
Natera reported an advancement in MRD based risk stratification through a multi modal Signatera model that combines longitudinal ctDNA, clinical data, digital pathology imaging and tumor sequencing, with data planned for presentation at an upcoming conference (Key Developments).
In prenatal and transplant testing, Natera launched the EDEN prospective study for its non invasive prenatal risk assessment test for preeclampsia and other complications, and completed enrollment in ACES EMB, a randomized trial assessing whether the Prospera Heart test can reduce reliance on routine invasive biopsies in heart transplant monitoring (Key Developments).

Valuation Changes

Fair Value Estimate has risen from about US$235 to about US$257, reflecting a modest uplift in the intrinsic value assessment.
Discount Rate has edged up slightly from about 7.03% to about 7.07%, indicating a marginally higher assumed cost of capital.
Revenue Growth assumption has moved up from about 17.1% to about 18.2%, implying a somewhat stronger top line outlook in the model.
Profit Margin assumption has increased from about 1.3% to about 4.4%, signaling a meaningfully higher expected profitability level in the updated estimates.
Future P/E assumption has decreased from a very large multiple to about 299x, suggesting a reduced valuation multiple applied to forward earnings in the model.

Growing adoption of molecular diagnostics and expanded clinical validation are driving revenue growth and increased reimbursement in core areas like oncology and organ health.
Investments in AI, automation, and new product launches are improving operational efficiency and positioning the company for future expansion in personalized medicine.
Heavy investment needs, regulatory hurdles, intense competition, and reimbursement challenges create persistent profitability and growth risks across Natera's core diagnostic markets.

Catalysts

About Natera

A diagnostics company, provides molecular testing services worldwide.What are the underlying business or industry changes driving this perspective?

Increasing adoption and acceptance of advanced molecular diagnostics is driving sustained volume and revenue growth across Natera's diversified portfolio, with significant headroom remaining for further penetration-particularly in oncology (Signatera) and organ health (Prospera); this will likely boost top-line revenue.
Expanding clinical validation through large-scale trials (DARE, IMvigor011, PROCEED/FIND, etc.) and broadening indications is expected to lead to further payer adoption and reimbursement, especially for new tumor types and expanded Medicare coverage; this should drive higher ASPs and gross margins.
Accelerated integration of AI and automation into diagnostic processes and revenue cycle management is providing greater operating leverage and efficiency, resulting in lower COGS and improving operating margins and net earnings over time.
Investment in new product launches (e.g., Fetal Focus NIPT, Signatera Genome, AI-based biomarkers) and a robust R&D pipeline positions Natera to capture growth from long-term trends in personalized medicine and early detection, underpinning future revenue expansion.
Natera is managing operating expenses while scaling up (e.g., commercial hiring in oncology, AI technical staff), with near-term OpEx increases not yet impacting revenue but setting up a slingshot effect expected to drive meaningful revenue and margin improvements beginning in late 2025 and 2026.

Natera Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Natera's revenue will grow by 15.2% annually over the next 3 years.
Analysts assume that profit margins will increase from -12.9% today to 3.7% in 3 years time.
Analysts expect earnings to reach $110.9 million (and earnings per share of $0.68) by about September 2028, up from $-253.2 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting $442.3 million in earnings, and the most bearish expecting $-239 million.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 335.4x on those 2028 earnings, up from -90.8x today. This future PE is greater than the current PE for the US Biotechs industry at 15.5x.
Analysts expect the number of shares outstanding to grow by 3.96% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 6.78%, as per the Simply Wall St company report.

Natera Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Significant reliance on ongoing clinical trial success and future regulatory or reimbursement approvals for new indications (e.g., Medicare coverage of expanded cancer types, FDA approval for early cancer detection), introducing execution and regulatory risk-failure or delays could hinder revenue growth and margin expansion.
High and growing R&D and SG&A expenses, including major investments in new trials, expanded commercial team, and AI initiatives, may create persistent pressure on net margins and delay pathway to sustainable profitability, especially if incremental revenues from these investments take longer to materialize or underperform expectations.
Intensifying competition in core oncology and women's health markets, as well as threat of new entrants or disruptive technologies (such as whole genome sequencing or diagnostics from larger, better-capitalized players), may lead to average selling price (ASP) erosion and lost market share-putting downward pressure on revenue and gross margins over the long term.
Revenue "true-up" adjustments and collection efficiency improvements have contributed meaningfully to recent results, but these cash cycle improvements and payer mix dynamics may be difficult to sustainably replicate, leading to increased volatility and uncertainty in cash flow and earnings projections.
Broader industry risks-including increasing regulatory scrutiny (e.g., MolDX reimbursement policy changes), payer cost-containment pressures, and potential tightening of healthcare budgets due to economic headwinds-could restrict reimbursement rates or utilization of advanced diagnostics, negatively impacting long-term revenue growth and net earnings.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $198.45 for Natera based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $268.0, and the most bearish reporting a price target of just $37.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $3.0 billion, earnings will come to $110.9 million, and it would be trading on a PE ratio of 335.4x, assuming you use a discount rate of 6.8%.
Given the current share price of $167.53, the analyst price target of $198.45 is 15.6% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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