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by Zacks Equity ResearchNovember 20, 2012 | Comments : 0 Recommended this article: ()
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Earnings momentum for Myriad Genetics (MYGN - Analyst Report) has been on the rise ever since this molecular diagnostic company released strong fiscal first-quarter results earlier this month that included an upbeat guidance. Shares of this Zacks #1 Rank (Strong Buy) have also advanced and reached a 52-week high of $30.48 on November 14. With a robust portfolio, a strong earnings surprise history, increased guidance and a year-to-date return of 45.7%, Myriad Genetics offers an attractive investment opportunity.
On November 5, Myriad Genetics reported fiscal first-quarter earnings per share of 36 cents, beating the Zacks Consensus Estimate by 12.5% and the year-ago earnings by 24%. The company has now delivered positive earnings surprises for 7 straight quarters with an average beat of 9.1%.
Revenues increased 21% year over year to $133.4 million, beating the Zacks Consensus Estimate of $130.0 million. Myriads two businesses Molecular diagnostic testing and Companion diagnostic services recorded revenues of $127.3 million (up 22% year over year) and $6.2 million (down 4.6%), respectively.
The companys flagship product, Bracanalysis (representing 78.7% of total revenues during the quarter), has been growing robustly over the past few quarters on the back of increasing penetration in both the Oncology and Womens Health markets. In the last reported quarter, this product recorded a 17% jump in revenues to $105 million. In addition, revenues derived from Colaris and Colaris AP, which assess a patient's risk of developing hereditary colorectal and uterine cancers, increased 26% to $12.1 million.
Moreover, the company is enjoying a strong and diversified pipeline across six major medical specialties. In the last earnings call, Myriads announcement of its expected launch of molecular diagnostic test Melapath in 2013 has acted as another impetus in driving the share price higher. Melapath is expected to play a ground-breaking role in determining whether a skin biopsy is malignant or benign. The company is confident about the potential of Melapath, which has achieved 95% accuracy in predicting which suspicious skin lesions are malignant and has an anticipated market opportunity of $400 million a year in the US.
Furthermore, the company has progressed in receiving reimbursements for the BART (Brac Analysis Large Rearrangement Technology) test. The Noridian Administrative Services announced that Medicare would reimburse the test for patients with a personal history of breast or ovarian cancer from October 1, 2012 onwards. Myriad has already started receiving huge number of testing requests.
Myriad Genetics raised its outlook for fiscal 2013. The company now expects revenues between $570 million and $585 million (previous guidance was $550-$565 million), reflecting growth of 15-18%. The raised guidance is primarily based on an improved outlook for the Molecular Diagnostics segment, which is expected to gross $545 million to $557 million in the fiscal year. The guidance for the Companion diagnostic remained unchanged at $25 million to $28 million. Earnings per share for the fiscal year is likely to be in a range of $1.50 to $1.55, up from the previous range of $1.44-$1.48.
Rising Earnings Estimates
Over the past 30 days, the Zacks Consensus Estimate for 2012 has gained 5.4% to $1.55 per share, thanks to upward revisions from all 13 estimates. This represents year-over-year growth of about 18.9%. Meanwhile, the Zacks Consensus Estimate for 2013 is up 4.7% to $1.77 on positive revisions from 12 of 13 estimates. This indicates growth of about 14.7% year over year.
Chart Reflects Strength
Myriads price performance has been reasonably strong with the chart showing an upward trend. Following the release of its first quarter results, the stock showed a steep uptrend and is currently trading above both its 50- and 200-day averages. A series of earnings beats, rising estimates and upbeat growth prospects make Myriad worth considering as a momentum stock.
Headquartered in Salt Lake City, Utah, Myriad Genetics employs a number of proprietary technologies to target the genetic basis of human diseases and the role these genes might play in the onset, progression and treatment of the respective diseases. So far, Myriad has launched nine commercial molecular diagnostic products, including five predictive medicine (designed to assess an individuals risk for developing a disease later in life), three personalized medicine (identification of a patients probability of responding to drug therapy) and one prognostic medicine (assess a patients risk of disease progression and recurrence) product. Myriad has a market capitalization of $2.45 billion.
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