Mizuho Names Guardant Health and Tempus AI as Top Picks in Oncology Diagnostics

Mizuho analysts have identified Guardant Health and Tempus AI as key investment opportunities in the precision oncology diagnostics sector, maintaining "Outperform" ratings on both companies ahead of their upcoming earnings reports. The firm highlights upcoming catalysts and significant long-term growth trajectories despite recent divergent stock performances across the industry.

Divergent Paths, Key Catalysts

According to a note from Mizuho, performance within the precision oncology space has been disparate since early May, creating what the firm sees as compelling entry points for select stocks. The analysts point to upcoming second-quarter earnings reports as a key event for both companies, which are scheduled to release results after the market close on July 30.

Guardant Health's Strong Run

Guardant Health (GH) has seen its stock surge 74% since May 1, a rally fueled by significant positive developments, according to Mizuho. Key catalysts for the stock's performance include:

• Recent FDA approval for its upgraded Guardant360 liquid biopsy test.
• Expanded insurance coverage for its Shield colorectal cancer screening test from UnitedHealth Group.

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Looking ahead, Mizuho anticipates a "blockbuster 2027" for the company as average selling prices and test volumes inflect. The firm's analysis sees a path for clinical oncology sales to exceed $2 billion by 2028, with Shield volumes potentially reaching over $700 million in the same year.

Tempus AI Seen as Undervalued

In contrast, Mizuho views Tempus AI (TEM) as an undervalued opportunity within the sector. The firm attributes the stock's recent weakness to "deal dynamics and optics" surrounding its planned all-stock acquisition of Personalis.

Despite near-term headwinds, Mizuho projects that Tempus AI's portfolio is positioned for a sustained compound annual growth rate in sales of over 30%, led by its Oncology Diagnostics and Data and Services divisions. While analysts note that investors are seeking more clarity on future revenue streams, Mizuho expressed confidence in the company's 2027 outlook, citing potential inflection points for its therapy selection and data services businesses.