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Here's Why You Should Invest in Genomic Health (GHDX) Now

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Genomic Health, Inc. has been gaining investor confidence on consistently positive results. Over the past year, the company’s share price has outperformed its industry. The stock has gained 52.9% against the industry’s 8% fall. Also, the company has fared better than the S&P 500’s 13% gain.

This developer and marketer of genomic-based clinical tests for cancer diagnosis, has a market cap of $1.72 billion.

With solid prospects, this Zacks Rank #1 (Strong Buy) stock is an attractive pick for now.

The company’s estimate revision trend for the current year is positive. In the past 60 days, six analysts revised their estimates upward with no movement in the opposite direction. Resultantly, earnings estimates rose around 42.4% to 47 cents.

Let’s find out whether the recent positive trend is a sustainable one.

Solid Quarterly Performance

Genomic Health exited first-quarter 2018 on a promising note. We are encouraged by the year-over-year rise in revenues, driven by solid performance in the United States and internationally.

Breast Cancer Reimbursement Prospects Bright

Genomic Health is seeing healthy progress with regard to establishing coverage for its Oncotype DX breast cancer test. In 2018, the company expects several key catalysts like the implementation of both PAMA reimbursement at a higher level than the 2016 invasive breast rate and AJCC staging criteria to drive growth. Further, the TAILORx (Trial Assigning Individualized Options for Treatment) study results, which have been selected for presentation at the Plenary Session at the 2018 American Society of Clinical Oncology Annual Meeting (ASCO), will also provide an impetus. 

According to Genomic Health, all these will help U.S. invasive breast cancer tests to be available in some international regions followed by reimbursement approvals.

Solid Prostate Cancer Test Uptake

Genomic Health’s U.S. prostate cancer business has consistently accelerated over the last few quarters. The company has seen increased adoption of this test on private reimbursement. First-quarter revenues in this business rose 75% on a year-over-year basis, led by rising test volumes, expanding coverage and payments from private payers along with CMS coverage for intermediate-risk patients.

Geographical Expansion Impressive

Genomic Health is making considerable expansion in the international arena. So far, the company has delivered over 900,000 test results to cancer patients in nearly 90 countries. During the first quarter of 2018, international tests increased high single-digit on the back of increased contribution from the U.K., excluding results from Germany, France and Italy.

Other Key Picks

A few other top-ranked stocks in the broader medical sector are Intuitive Surgical (ISRG - Free Report) , Illumina, Inc (ILMN - Free Report) and Amedisys, Inc. (AMED - Free Report) . While Intuitive Surgical and Illumina sport a Zacks Rank #1, Amedisys carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Intuitive Surgical has an expected long-term earnings growth rate of 12.1%.

Illumina expects long-term earnings growth of 20%.

Amedisys has an expected long-term earnings growth rate of 17.5%.

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