by Zacks Equity ResearchDecember 19, 2012 | Comments : 0 Recommended this article: (0)
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A Winning Quarter
On November 5, Myriad 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%.
Revenues increased 21% year over year to $133.4 million, beating the Zacks Consensus Estimate of $130.0 million. The company's Molecular diagnostic testing business recorded sales growth of 22% to $127.3 million, while the Companion diagnostic services business had a sales slump of 4.6% to $6.2 million.
The companys flagship product Bracanalysis (representing 78.7% of total revenues during the quarter) has been recording robust growth over the past few quarters on the back of increasing penetration in both Oncology and Womens Health markets. In the last reported quarter, revenue for this product jumped 17% 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. The robust growth of the Colaris franchise was driven by an increase in demand and higher revenue per test due to the inclusion of a fourth gene, PMS2, along with market share gains.
Moreover, the company enjoys a strong and diversified pipeline across six major medical specialties. In the last earnings call, Myriads announcement of its expected launch of the molecular diagnostic test Melapath in 2013 has acted as another impetus in driving the share price up.
Furthermore, the company has progressed well in receiving reimbursements for the BART (Brac Analysis Large Rearrangement Technology) test. Following the Noridian Administrative Services announcement,, Medicare has started reimbursing the test for patients with a personal history of breast or ovarian cancer. Myriad has already received a 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-$557 million in the fiscal year. The guidance for Companion diagnostic remained unchanged at $25$28 million. Earnings per share for the fiscal year is likely to be in a range of $1.50-$1.55, up from the previous range of $1.44-$1.48.
Rising Earnings Estimates
Over the past 60 days, the Zacks Consensus Estimate for fiscal 2013 has gained 4.8% to $1.54 per share as all 13 estimates were revised upward. This represents year-over-year growth of about 18.8%. Meanwhile, the Zacks Consensus Estimate for 2014 is up 4.1% to $1.76 on the back of positive revisions from 12 of 13 estimates. This indicates estimated growth of about 14.1% year over year.
Myriad Genetics is currently trading at a forward P/E of 19.44x, a 21.4% discount to the peer group average of 22.35x. Additionally, the price-to-book ratio of 3.5 is in line with the peer group average. The companys trailing 12 month return on equity (ROE) of 18.5% is well ahead of the peer group average of 9.8%. Shares also look attractive with a return on investment (ROI) of 18.5%, which is substantially higher than the peer group average of 8.3%. Return on assets (ROA) stands at 17.0%, a lofty premium compared to the peer group average of 7.0%.
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 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 $2.21 billion.
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