What’s Next For Guardant Health Stock After An 18% Fall In A Month?

October 21st, 2021 by Trefis Team

The stock price of Guardant Health (NASDAQ: GH), a healthcare company that offers non-invasive cancer diagnosis tests, has seen an 18% fall over the last twenty-one trading days. This can be attributed to its plans to acquire NeoGenomics (NYSE: NEO). Both the companies offer multiple diagnostics tests for cancer patients, but investors were concerned about the valuation for NeoGenomics. The market capitalization for NEO stock was around $6 billion, earlier this month, compared to around $10 billion for Guardant, and with an acquisition of such a size, Guardant would have to use a significant portion of its stock. As such, GH stock plummeted 14% in a single trading session on October 1. However, a few days later there were reports of Guardant deciding not to pursue NeoGenomics, and this led to some respite in GH stock, but it didn’t stage a rebound toward the $125 levels it was at before this development. [1]

Now that GH stock has seen a fall of 18% in a month, will it continue its downward trajectory, or is a rise imminent? Going by historical performance, there is a strong chance of a rise in GH stock over the next month. Out of 67 instances in the last three years that GH stock saw a twenty-one-day fall of 18% or more, 50 of them resulted in GH stock rising over the subsequent one-month period (twenty-one trading days). This historical pattern reflects 50 out of 67, or about 75% chance of a rise in GH stock over the coming month. See our analysis on Guardant Health Stock Chance of Rise for more details.

So, if this follows historical performance, it is likely that GH stock will rise to higher levels going forward. Also, Guardant Health Stock Return summarizes GH stock performance and chances of its rise or decline, among other metrics that matter.

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Calculation of ‘Event Probability‘ and ‘Chance of Rise‘ using last three years data

  • After moving 4.3% or lower over a five-day period, the stock rose in the next five days on 54% of the occasions.
  • After moving <1% or more over a ten-day period, the stock rose in the next ten days on 53% of the occasions
  • After moving -18% or more over a twenty-one-day period, the stock rose in the next twenty-one days on 75% of the occasions.

How does Guardant Health (GH) stock return in the recent past compare with peers and the S&P 500?

  • Five-Day Return: TMO highest at 5.6%; S&P 500 lowest at 1.4%
  • Ten-Day Return: ILMN highest at 5.2%; S&P 500 lowest at 0.09%
  • Twenty-One Day Return: ^SPX highest at 4.2%; S&P 500 lowest at -18%

While GH stock may see higher levels, 2020 has created many pricing discontinuities which can offer attractive trading opportunities. For example, you’ll be surprised how counter-intuitive the stock valuation is for Abbott vs. Qorvo.
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Notes:
  1. Guardant Health Decides Against Buying NeoGenomics, Ed Hammond, Bloomberg, Oct 4, 2021 [↩]