Back to top

Analyst Blog

We recently upgraded Genomic Health (GHDX - Analyst Report) to ‘Outperform’ from ‘Neutral’ on the basis of robust growth in its Oncotype DX franchise, a trend that is expected to continue given the various strategic initiatives undertaken by the company.  

These strategies aim at increasing acceptance of its flagship product, Oncotype DX test. Genomic we believe is well placed to make the most of the huge market potential. It has been observed that the Oncotype DX breast cancer test changed treatment decision in 37% of early-stage breast cancer patients, thereby resulting in hundreds of millions of dollars in healthcare savings.

Genomic Health also diversified its offering with the launch of the Oncotype DX DCIS Score at the end of 2011. Besides, we are encouraged by the progress made by the company on the reimbursement front. Adoption of the test is expected to improve with Medicare’s decision to cover the Oncotype DX colon cancer test. Accordingly, we expect the growth momentum to remain on a steady keel.

We are also encouraged by the company’s decision of setting up a wholly owned genetics subsidiary, InVitae Corporation, in March 2012. This decision involves $20 million of investment over the next two years, the impact of which has been considered in the financial outlook for 2012. We expect this business to be a long-term contributor to the growth profile given the huge market opportunity in DNA sequencing.

During the most recent quarter, the company established a strategic alliance with OncoMed Pharmaceuticals for biomarker research to accelerate the clinical development of novel antibody cancer therapeutics. Although setting up of the genetic subsidiary will involve substantial investment (that could result in a net loss in the second quarter), we expect the company to benefit from its focus on sequencing. Despite the tough competitive landscape with the presence of players such as Myriad Genetics (MYGN - Analyst Report) and Cepheid (CPHD - Analyst Report), we expect Genomic Health to grow over the long term.

Our recommendation is backed by a Zacks #1 Rank (Strong Buy) in the short term.

Please login to or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research


Are you a new Zacks Member or a visitor to

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
UTD THERAPE… UTHR 117.83 +28.51%
TRIQUINT SE… TQNT 20.67 +6.52%
RF MICRO DE… RFMD 12.47 +6.04%
VASCO DATA… VDSI 14.77 +4.68%
BANCO DO BR… BDORY 15.53 +3.95%