IPO of the Week: Guardant

Josef Schuster
Dr. Josef Schuster is the founder of Chicago-based IPOX Schuster LLC and chief architect of the IPOX® Indexes. The IPOX methodology is implemented in an IPO and spin-off strategy at Catalyst Funds. Before founding IPOX, Dr. Schuster pursued his academic work on European IPOs in the Financial Markets Group (FMG) at the London School of Economics (LSE), where he completed his MSc and PhD and conceived the idea to start IPOX. He regularly appears in the media as an expert in global New Listings and respective investment products.

Company Description

Guardant

Founded in 2011, Guardant Health is a Redwood City, CA-based precision oncology company. The company provides blood tests (or liquid biopsy) for recurrence and early detection for cancer diagnosis and treatment (cancer continuum of care).

Business Model

Guardant Health generates revenue from (i) precision oncology testing (the sales of tests) and (ii) development services (collaboration arrangement with biopharmaceutical companies and large medical institutions in companion diagnostic development and regulatory approval services, clinical trial referrals and liquid biopsy testing development and support).

IPO History

On 10/04/2018, Guardant Health launched on Nasdaq led by J.P. Morgan and BofA Merrill Lynch. The precision oncology company sold 12.5 million shares with a 15% over-allotment option fully exercised. Guardant Health raised $273.125 million after pricing at $19.00 per share, above its expected range of $15.00 – $17.00/share and was valued at $1.62 billion at offer. The shares opened 46.05% higher at $27.75/share and close the first day with a 69.47% initial return. Guardant Health was included in the IPOX® 100 U.S. Portfolio on 12/21/2018 and currently weighs approximately 0.5% of the portfolio.

Historical Performance

Growth Outlook

Industry Comparison

Company

Stock

Symbol

IPO

Date

Initial
Return

Offer to Date

2019

YTD

Beta to S&P

EPS

2018

Revenue

(in millions)

2018 Net Income

(in millions)

P/S
ratio

Guardant

GH US

10/4/2018

69.47%

410.47%

158.02%

1.08

-$2.80

$90.64

-$85.06

97.6x

Foundation Medicine

FMI US

9/25/2013

96.39%

Acquired by Roche in 2018 for 2.2 billion in cash, at a 28.7% premium

ThermoFisher Scientific

TMO US

01/13/1978

27.04%

1.05

$7.24

$24,358.0

$2,938.0

4.6x

Illumina

ILMN US

7/28/2000

144.83%

364.95%

0.01%

1.52

$5.56

$3,333.0

$826.0

12.9x