What a time it’s been for Natera. In the past six months alone, the company’s stock price has increased by a massive 59.9%, reaching $328.13 per share. This was partly due to its solid quarterly results, and the performance may have investors wondering how to approach the situation.
Is now still a good time to buy NTRA? Or are investors being too optimistic? Find out in our full research report, it’s free.
Why Are We Positive on Natera?
Founded in 2003 as Gene Security Network before rebranding in 2012, Natera (NASDAQ: NTRA) develops and commercializes genetic tests for prenatal screening, cancer detection, and organ transplant monitoring using its proprietary cell-free DNA technology.
1. Elevated Demand Drives Higher Sales Volumes
Revenue growth can be broken down into changes in price and volume (the number of units sold). While both are important, volume is the lifeblood of a successful Immuno-Oncology company because there’s a ceiling to what customers will pay.
Natera’s tests processed punched in at 1.04 million in the latest quarter, and over the last two years, averaged 19.3% year-on-year growth. This performance was fantastic and shows its offerings have a unique value proposition (and perhaps some degree of customer loyalty). 
2. EPS Improving Significantly
Analyzing the long-term change in earnings per share (EPS) shows whether a company’s incremental sales were profitable — for example, revenue could be inflated through excessive spending on advertising and promotions.
Although Natera’s full-year earnings are still negative, it reduced its losses and improved its EPS by 18.2% annually over the last five years. The next few quarters will be critical for assessing its long-term profitability. An inflection point could be coming soon.
3. Increasing Free Cash Flow Margin Juices Financials
If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.
As you can see below, Natera’s margin expanded by 70 percentage points over the last five years. Natera’s free cash flow margin for the trailing 12 months was 3.1%.
Final Judgment
These are just a few reasons why Natera is one of the best healthcare companies out there, and with the recent rally, the stock trades at $328.13 per share (or a forward price-to-sales ratio of 15×). Is now the time to initiate a position? See for yourself in our full research report, it’s free.
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