Key Points
Stanley Druckenmiller has quite a long and distinguished career as an investor. Much of this has to do with high-risk bets that have paid off enormously, such as when he and his boss, George Soros at Quantum Fund, shorted the U.K. pound for a handsome profit of what was reported to be around $1 billion.
For that reason, the trades Druckenmiller makes with his Duquesne family office matter, and his picks are taken seriously. One of the more intriguing ones is Duquesne’s largest holding currently — and for eight quarters now. It’s not a famous name; rather, it’s a next-generation healthcare diagnostics company that was once something of a sleeper. Here’s a bit more about it.
Doing it with diagnostics
This huge bet on the future is Natera (NASDAQ: NTRA), a medical diagnostics company that uses unique, state-of-the-art technology to evaluate a patient’s blood sample. Natera isn’t the only business providing these liquid biopsies, as they’re known, but its personalized, tumor-informed approach makes it a best-in-class screener in numerous use cases.
The major one is oncology, which is hardly surprising given the prevalence of cancer. Natera has a set of tests for this, led by Signatera, a highly personalized one constructed from the patient’s tumor profile. With this, it detects circulating tumor DNA in the blood. To say this is useful in cancer detection is an understatement, so it’s hardly surprising that Natera processed roughly 296,700 oncology tests in the company’s second quarter. That was up a highly impressive 57% year over year.
Oncology screening isn’t the company’s only revenue driver. Zooming out a bit, its tally of completed tests rose by more than 22% that quarter, crossing the 1 million mark.
Natera’s financials have followed suit. Its second-quarter revenue, overwhelmingly derived from testing services, zoomed 38% higher. Even though there was a leap in research and development expenses — usually a good sign for an ambitious healthcare company — its net loss narrowed admirably, from nearly $101 million in the year-ago quarter to under $67 million.
Paths for growth
Natera still has strong growth potential if it simply expands the scope and reach of its tests, both here and abroad. It’s already traveling down that path: For example, in late June, it earned approval from Japan’s Pharmaceuticals and Medical Devices Agency (PMDA) for Signatera to screen for colorectal cancer.
Natera’s diagnostics are also seeing increased take-up from expanded Medicare local coverage determinations (decisions made by regional administrative contractors of the program). These have been an important factor in the increased overall take-up of the tests and are sure to continue to be so.
One major concern for almost any up-and-coming healthcare company is its runway. In other words, how long can it continue operating while incurring losses? Natera looks good: At the end of June, it had nearly $1.1 billion in its coffers, and that cash position had actually grown slightly over each of the preceding four quarters. And management is guiding for positive free cash flow for the entirety of 2026. This well of greenbacks won’t go dry anytime soon.
At the moment, according to data compiled by Yahoo! Finance, 19 analysts track the stock (a testament to its increasing popularity). These pundits foresee Natera continuing to reduce its bottom-line losses; their collective estimate for full-year 2026’s deficit is $1.39 per share and for 2027’s is a wafer-thin $0.09 per share. Either would be a marked improvement over last year’s $1.52-per-share loss.
There will also be notable revenue gains. The consensus prognosticator projection for annual take is $2.91 billion this year, up almost 26% from 2025. In 2027, this should again bounce higher, to nearly $3.5 billion.
A negative or two to consider
Natera isn’t a picture-perfect stock; if it were, Druckenmiller probably would have bought and exited from it years ago. While its bottom-line losses are narrowing, they’re still considerable and persistent, and expenses will always be high for the company.
It’s also getting famous, thanks in no small part to the well-respected investor, and its share price growth reflects this — up 87% over the last year alone, compared to the S&P 500 index’s 17% gain. This makes its valuations extremely lofty, with a price-to-sales ratio of almost 17.
So should you pull a Druckenmiller and buy Natera? I feel the stock has a very high ceiling, since it has few (if any) peers, and the more effective a diagnostic, the greater the demand will be. Even with that price run-up, I think the stock has plenty more room to rise, and I consider Natera a fine buy.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Eli Lilly, Meta Platforms, and Natera. The Motley Fool recommends Delta Air Lines. The Motley Fool has a disclosure policy.