Myriad Retained at Outperform - Analyst Blog
March 08 2013 - 4:50AM
Zacks
On Mar 5, 2013, we reaffirmed our
long-term Outperform recommendation on Myriad Genetics
Inc. (MYGN) following its strong second-quarter fiscal
2013 results and upward revision in the fiscal outlook.
Why the Reiteration?
On Feb 5, Myriad reported another positive earnings surprise when
its second-quarter earnings per share rose 27% on a year-over-year
basis to 42 cents, reflecting a beat of 10.5% over the Zacks
Consensus Estimate. Revenues climbed 21% to $149.1 million,
surpassing the Zacks Consensus Estimate. The quarter showed sign of
balanced growth as Myriad’s mainstay franchise of molecular
diagnostic test was supported by the relatively minor companion
diagnostic segment.
While Bracanalysis test remains Myriad’s flagship product, the BART
(Bracanalysis Rearrangement Technology) test continues to gain
traction. The positive momentum of the BART test is reflected in
the massive five time increase of its revenues to $15.8
million.
Apart from these, Myriad has a gamut of other tests to drive
growth. The company’s strong pipeline, with certain tests that will
serve a billion-dollar market, is another upside.
On the other hand, Myriad’s focus on the companion diagnostic
market is encouraging. The company’s agreements with several
pharmaceutical companies like Sanofi (SNY) is
likely to boost revenues for the companion diagnostic franchise
going forward.
Myriad’s new share buyback program should provide earnings upside
in the coming quarters. Meanwhile, the company has made commendable
progress with respect to its expansion in Europe.
Although there is no dearth of growth catalysts for Myriad, margin
pressure and reimbursement price cuts for its tests might sour its
momentum. We also remain watchful of the patent litigation (to
decide whether isolated human genes can be patented), which might
affect Myriad’s patent landscape for its flagship product. The
decision is anticipated in Jun 2013.
Accordingly, the stock carries a Zacks Rank #3 (Hold). Other
medical stocks that warrant a look are Cyberonics
(CYBX) and Given Imaging (GIVN), both carrying
Zacks Rank #1 (Strong Buy).
CYBERONICS INC (CYBX): Free Stock Analysis Report
GIVEN IMAGING (GIVN): Free Stock Analysis Report
MYRIAD GENETICS (MYGN): Free Stock Analysis Report
SANOFI-AVENTIS (SNY): Free Stock Analysis Report
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