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Genomic Health Q1 Results Weak, Cancer Test Business Strong
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On May 16, we issued an updated research report on Redwood City, CA-based Genomic Health Inc. . It is a global cancer company with a focus on advanced molecular diagnostics.
For the last three months, Genomic Health has been trading above the Zacks categorized Medical - Biomedical and Genetics industry. In spite of a dismal first-quarter 2017, the company’s share price continues to trend higher. The company has gained 5.5% over the past three months, compared to the broader industry’s 4.2% decline.
Genomic Health continues to witness strong test volumes on its encouraging cancer findings. It has made significant progress with its Oncotype DX breast cancer test during the first quarter of 2017 internationally. Recently, management presented favorable data on Oncotype DX Breast Recurrence Score from multiple studies conducted globally.
Genomic Health is also upbeat about its other assay types. Notably, the company’s U.S. prostate business has consistently improved in the first quarter of 2017. The business minted an astounding 40% growth in tests and 26% revenue growth year over year.
Oncotype DX Genomic Prostate Score currently has the opportunity to cater to 160,000 patients in the U.S. every year. We believe this is indicative of the huge potential for revenue growth that the company’s Prostate Cancer test has in the U.S.
Additionally, the company’s colon cancer test helped it attain a global identity with more than 26,060 Oncotype DX test (in three major cancer types) results. Having established a strong foothold in the U.S., Genomic Health is now making considerable expansion in the international arena.
On the flip side, growth in the cancer test business failed to boost Genomic Health’s third-quarter results as both the top and the bottom line missed the Zacks Consensus Estimate. The company’s cancer tests and studies are still in the early-to-mid stage of development and bear validation risks. Thus, the cancer test business failed to make any significant contribution toward the company’s revenues.
We are also concerned about the company’s rising operating losses. Genomic Health has adopted several strategies to drive its top line, including portfolio expansion and penetration in the international arena which has driven its selling and marketing expenses in the first quarter of 2017.
Zacks Rank & Key Picks
Genomic Health carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the broader medical sector are Luminex Corporation , Hologic, Inc. (HOLX - Free Report) and Edward Lifesciences, Inc. (EW - Free Report) . Notably, Luminex sports a Zacks Rank #1 (Strong Buy), while Hologic and Edward Lifesciences carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Luminex has an expected long-term adjusted earnings growth of almost 16.3%. The stock added roughly 17.0% over the last three months.
Hologic has a long-term expected earnings growth rate of 11.33%. The stock has a solid one-year return of roughly 30.5%.
Edward Lifesciences recorded a stellar EPS growth rate of almost 16% (last 3–5 years of actual earnings).
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Genomic Health Q1 Results Weak, Cancer Test Business Strong
On May 16, we issued an updated research report on Redwood City, CA-based Genomic Health Inc. . It is a global cancer company with a focus on advanced molecular diagnostics.
For the last three months, Genomic Health has been trading above the Zacks categorized Medical - Biomedical and Genetics industry. In spite of a dismal first-quarter 2017, the company’s share price continues to trend higher. The company has gained 5.5% over the past three months, compared to the broader industry’s 4.2% decline.
Genomic Health continues to witness strong test volumes on its encouraging cancer findings. It has made significant progress with its Oncotype DX breast cancer test during the first quarter of 2017 internationally. Recently, management presented favorable data on Oncotype DX Breast Recurrence Score from multiple studies conducted globally.
Genomic Health is also upbeat about its other assay types. Notably, the company’s U.S. prostate business has consistently improved in the first quarter of 2017. The business minted an astounding 40% growth in tests and 26% revenue growth year over year.
Oncotype DX Genomic Prostate Score currently has the opportunity to cater to 160,000 patients in the U.S. every year. We believe this is indicative of the huge potential for revenue growth that the company’s Prostate Cancer test has in the U.S.
Additionally, the company’s colon cancer test helped it attain a global identity with more than 26,060 Oncotype DX test (in three major cancer types) results. Having established a strong foothold in the U.S., Genomic Health is now making considerable expansion in the international arena.
On the flip side, growth in the cancer test business failed to boost Genomic Health’s third-quarter results as both the top and the bottom line missed the Zacks Consensus Estimate. The company’s cancer tests and studies are still in the early-to-mid stage of development and bear validation risks. Thus, the cancer test business failed to make any significant contribution toward the company’s revenues.
We are also concerned about the company’s rising operating losses. Genomic Health has adopted several strategies to drive its top line, including portfolio expansion and penetration in the international arena which has driven its selling and marketing expenses in the first quarter of 2017.
Zacks Rank & Key Picks
Genomic Health carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the broader medical sector are Luminex Corporation , Hologic, Inc. (HOLX - Free Report) and Edward Lifesciences, Inc. (EW - Free Report) . Notably, Luminex sports a Zacks Rank #1 (Strong Buy), while Hologic and Edward Lifesciences carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Luminex has an expected long-term adjusted earnings growth of almost 16.3%. The stock added roughly 17.0% over the last three months.
Hologic has a long-term expected earnings growth rate of 11.33%. The stock has a solid one-year return of roughly 30.5%.
Edward Lifesciences recorded a stellar EPS growth rate of almost 16% (last 3–5 years of actual earnings).
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
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