Is Guardant Health Stock a Solid Long Term Investment?

Guardant Health Inc. (GH) is a good example of a company that is using unique circumstances to demonstrate what they bring to the marketplace. The company has made a niche for itself by selling specified analytical approaches to people battling cancer. The theory behind this approach is that more tailor-made treatments would yield better results for those who are going through a battle with cancer. Traditionally it has been difficult to procure unique testing processes, but GH aims to change that with their unique approach to acquiring a patient’s genetic blueprint. While traditional treatment has required an invasive biopsy, GH intends to use their technology to create the same type of genetic blueprint with only a blood test. This could be a literal lifesaver for cancer patients all over the world. The possibilities for the company to apply this technology are very exciting. Though it remains to be seen if the company can weather this recent economic downturn.

Turbulent Markets

Health stocks have recently been making lots of waves in the industry. With the spread of COVID-19 people are looking to park their money in stocks that have the potential for profitability in these uncertain times. It appears that the emphasis on medical supplies has caused a shockwave throughout the medical industry. This is in addition to the problems that it is causing in the retail sector. The recent weeks have brought some of the most volatile market trading days ever recorded, where 8% jumps in both directions have been reported frequently. It has been speculated that medical stocks could have a hard time adjusting to the swings, but there have been analysts who are refusing to pull back. Yes, it is true that a significant portion of medial care will focus on COVID-19 in the coming months, but that does not mean that other medical conditions will fall by the wayside.

The phenomenon of needing to supply medical care for the virus, while also providing care to those that are already sick, is a new reality that many different health companies will have to deal with. It is for this reason that many investors remain optimistic that companies like GH will continue to be profitable during the inevitable downturn. It will be interesting to see how companies are able to deal with the situation in this difficult time. The good news is that it could spark innovation all across the sector. People will need to learn to adapt to doing work without meeting face-to-face. A new wave of telehealth could quickly be approaching, forced into action for a reason that not many could have anticipated. If this is the case, then healthcare stocks like GH could be the beneficiary. There are certain to be shakeups in the market and the most adaptable companies will come out the winners. Difficult times like these can force new innovations not previously seen. While the short-term pain is undesirable, it could bolster stocks and society in the future.

Operating Difficulties

The unprecedented market has also presented some challenges to the operation of the company. While GH’s operations are less intrusive than other methodologies, they still require a blood sample that will be hard to get without a person-to-person encounter. There are other parts of the business that can be outsourced to telehealth but this one seems like a particularly intractable problem. There are also the day-to-day challenges of running a lab in the midst of a crisis. There is even a possibility that the company could face wartime order to shift their business to one of testing for COVID-19. Companies all around the world have already been refitted to manufacture alternate products for the war against the virus. If the company is forced to change its lab work, then it might have to halt normal business operations. This could hamper the long-term viability of widespread unique cancer treatment.

Most importantly, these problems do not even account for the day-to-day logistical challenges faced with running a lab in the midst of this pandemic. Cleaning supplies have been in short supply and subject to serious price fluctuations. If GH was to see a shortage of these critical products, then this could hamper its services as well. It will be critical that resources are allocated appropriately in the face of any possible shortages. Unfortunately, cancer and other diseases do not yield in the face of a pandemic. It will be more important than ever for GH to remain flexible and open to their approach to treatment. This is particularly the case given that lives are in the balance. Being quick and adaptable in the face of adversity will mean the difference between life and death for many patients.

Conclusion

Overall, it is important to monitor GH before making an investment either way. As the bear market continues more and more opportunities will become available. It makes sense to choose these battles wisely in order to maximize return. Health stocks are particularly interesting at this time and can provide a shield against larger market sluggishness. Though it should be noted that these stocks do often fall in tandem with the aggregate market- at least at first. It is possible that medical stocks will have more resiliency in the bear market, but it is important to determine which stocks you select. GH is a good option to keep in mind, but the fundamentals of the company must remain strong in the coming months. Any shift away from their core competency is going to perhaps spell long-term trouble for the company. As long as GH continues to focus on the most effective and customized cancer treatments, they will have a moat that will be difficult to penetrate. The medical sector is offering many interesting opportunities in the coming weeks and months. It likely wouldn’t hurt to take a strong look at adding medical companies to the basket. Many opportunities are waiting in the wing.