Overview
Bernstein’s latest sector analysis identifies Guardant Health, Natera, Waters Corporation and Agilent Technologies as the leading life‑science tools and diagnostics equities, assigning each an Outperform rating and specific price targets that imply upside ranging from 18% to 28%.
Guardant Health
Bernstein projects Guardant Health’s Guardant360 ADLT status to generate revenue upside not yet reflected in consensus estimates, estimating the company will be 6.6% ahead of consensus in 2027 and 12.2% ahead in 2028. The firm received FDA approval for its Guardant360 CDx test as a companion diagnostic for a HER2‑positive lung cancer therapy, enabling national coverage determination and ADLT pricing. The American Cancer Society also incorporated Guardant’s Shield blood test into its colorectal‑cancer screening guidelines. Bernstein expects a transition to the NovaSeq X platform to lift total‑company gross margins by 350–550 basis points in 2026 and notes Guardant is the most‑shorted stock in its coverage universe.
Natera
Natera is positioned for volume growth and improved reimbursement in minimal residual disease testing. The company secured Japan’s PMDA approval for its Signatera assay for colorectal‑cancer patients, marking the first PMDA‑cleared molecular residual disease test in the country, with a commercial launch anticipated before year‑end. A regulatory filing (MolDx) for seven cancer types is expected to act as an average selling price driver. Enhancements to the Panorama test now allow detection of fetal cell‑free DNA at eight weeks gestation, improving early‑pregnancy screening. Bernstein highlights a forthcoming readout of the FIND‑CRC colorectal‑cancer screening test in early 2027 as a potentially high‑volatility catalyst that is not yet priced into the stock. The firm also announced a partnership with Aveta Biomics to employ Signatera in a global Phase 3 head‑and‑neck cancer trial.
Waters Corporation
Bernstein forecasts 5% instrument growth for Waters in 2025, noting that the current cycle still offers upside relative to the typical high‑single‑digit growth seen in up‑cycles lasting two or more years. Recurring revenue has risen to 70% of total revenue, up from 57% in 2024, following the BD acquisition, and recurring streams generally command higher multiples. The company has begun to realize synergies from the BD deal, and its salesforce efficiency has improved since CEO Udit Batra took charge in 2020. Waters also announced a strategic partnership with IMU Biosciences to develop an AI‑powered immunology platform and launched a new Coin Cell Differential Scanning Calorimeter for battery‑safety testing.
Agilent Technologies
Bernstein sees similar room for instrument‑replacement‑cycle upside at Agilent, with a 5% growth rate recorded from 2019 through 2025, below the company’s long‑term average. The first quarter of 2026 recorded a book‑to‑bill ratio above one for the ninth consecutive quarter, indicating strong demand. Agilent trades at roughly a three‑times earnings discount to Waters, a gap Bernstein expects to narrow. Industrial and applied end‑markets remain robust, and the firm’s M&A strategy is shifting toward assets that enable cross‑selling. Recent developments include the acquisition of Biocare Medical, a clinical‑pathology specialist, and a collaboration with OpenAI and Boston Consulting Group to embed artificial‑intelligence solutions across Agilent’s operations and product portfolio.
Conclusion
Bernstein concludes that the life‑science tools sector has likely bottomed and that stocks with distinct growth catalysts—such as Guardant’s ADLT pricing, Natera’s Japanese approval and pipeline, Waters’ recurring‑revenue boost, and Agilent’s AI‑driven initiatives—are positioned to outperform broader market recovery.