BTIG Highlights Rising Valuations in Diagnostics Sector, Names Guardant Health Top Pick

Financial services firm BTIG has highlighted climbing valuations across the specialty labs and diagnostics sector ahead of second-quarter earnings reports. In a new analyst note, the firm observed that investor expectations vary, with some companies poised for strong results while others face a more muted outlook.

Sector Valuations Climb

According to BTIG analyst Mark Massaro, valuations in the group have continued to expand. The note pointed to Natera (NASDAQ:NTRA), which recently surpassed a $40 billion market capitalization, a figure BTIG described as the "largest lab valuation of all time."

Natera currently trades at approximately 11 times its 2027 consensus revenue. BTIG's top pick, Guardant Health (NASDAQ:GH), trades at an even higher multiple of 12 times 2027 revenue, while other small and mid-cap peers in the sector trade closer to 8 times.

Key Q2 Earnings Previews

In its preview of upcoming earnings, BTIG outlined its expectations and rating updates for several key players:

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• Guardant Health (NASDAQ:GH): Maintained as a top pick with a Buy rating and a $190 price target. BTIG expects investors will look for a 4% revenue beat and a sequential increase in Shield screening test volumes to 54,000.
• Natera (NASDAQ:NTRA): Price target raised to $290 from $275, with a Buy rating maintained. The firm is looking for a 6% revenue beat and a 25,000 quarter-over-quarter increase in Signatera test volumes.
• BillionToOne (NASDAQ:BLLN): Named a small-cap top pick for the second half of 2026. BTIG raised its price target to $142 from $130, anticipating a 4% top-line beat.
• Adaptive Biotechnologies (NASDAQ:ADPT): Price target lifted to $24 from $22. Analyst sentiment has reportedly improved following the company's announcement that it will split its two businesses by the end of 2026.

Analyst Commentary on Specific Stocks

The BTIG note also provided further context on several companies undergoing significant changes. For GeneDx (NASDAQ:WGS), which BTIG rates as a Buy, the firm noted the stock appears undervalued at 3 times 2027 consensus revenues. This follows a volatile period that saw a 50% stock decline in the first quarter, followed by key management changes and new coverage wins that spurred a rebound.

Regarding Tempus AI's (NASDAQ:TEM) recent $1.5 billion acquisition of Personalis, BTIG expressed support for the deal. The firm believes Personalis will help Tempus expand its presence in the minimal residual disease (MRD) market, which it estimates to be worth over $20 billion.