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Why Is Myriad Genetics (MYGN) Up 15.8% Since the Last Earnings Report?
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A month has gone by since the last earnings report for Myriad Genetics, Inc. (MYGN - Free Report) . Shares have added about 15.8% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Recent Earnings
Myriad Genetics reported adjusted earnings per share (EPS) of $0.26 in the second quarter of fiscal 2017, down 42.2% year over year. However, adjusted EPS beat the Zacks Consensus Estimate by 8.3% and surpassed the company’s guided range of $0.23–$0.25.
Including one-time items, the company reported net income of $5.9 million or earnings of $0.26 per share in the reported quarter, exhibiting a decline of 84% and 82%, respectively.
Revenues
Total revenue rose 3.3% year over year to $196.5 million. The figure also outpaced the company’s guidance of $188–$190 million. The top line also exceeded the Zacks Consensus Estimate of $191 million.
The year-over-year rise in the top line was primarily on account of sequential growth in hereditary cancer revenues and strong results from GeneSight.
Segment-wise, Molecular diagnostic tests (93.5% of total revenue) recorded total revenue of $183.9 million, up 1% year over year, mainly on account of EndoPredict testing revenues which surged 78% to $1.6 million. Prolaris testing revenues also rose 63% to $3.1 million. However, Hereditary cancer testing revenues dropped 13% year over year to $143.9 million, Vectra DA testing revenues fell 5% to $10.7 million and other testing revenues remained flat at $2.9 million.
On the other hand, Pharmaceutical and clinical service revenues (accounting for the rest) in the second quarter of 2017 grossed $12.6 million, reflecting year-over-year growth of 18%.
Margin Trends
Gross margin in the quarter under review contracted 160 basis points (bps) to 77.4%. According to management, this decline was due to unfavorable product mix with more revenues coming in from lower margin segments such as pharmaceutical and clinical services along with reduced fixed cost absorption on lower hereditary cancer revenues. Additionally, the company witnessed an impact from the full implementation of long-term contracts in hereditary cancer.
Operating expenses rose 29.2% to $139 million owing to a 32.5% rise in selling, general and administrative (SG&A) expenses to $120 million. Research and development (R&D) expenses rose 11.4% (to $19 million) in the reported quarter. Consequently, the operating margin contracted a stupendous 1348 bps, down 48.1%.
Financial Position
Myriad exited the second quarter of fiscal 2017 with cash, cash equivalents and marketable securities of $162.5 million, higher than $148.4 million at the end of first-quarter 2017. Year to date, cash used in operations totaled $28.5 million, down 65.2% year over year. Consequently, free cash flow was down to $29.0 million from $39.8 million a year ago. The company repurchased 6.0 million shares for $10 million during the second quarter of 2017.
Guidance
Myriad narrowed its earlier guidance for fiscal 2017. The company currently expects revenues in the range of $745–$755 million, compared to the earlier expectation of $740–$760 million. The Zacks Consensus Estimate of $760.2 million is above the range.
On the bottom-line front, the company expects to generate adjusted EPS in the band of $1.00–$1.05, reducing the higher end by $0.05 from the previous one ($1.00–$1.10). The current Zacks Consensus Estimate of 99 cents lies below Myriad's guidance.
Alongside, management has provided its outlook for the third quarter of fiscal 2017. The company estimates adjusted earnings per share at $0.23–$0.25 on total revenues of $188–$190 million. The Zacks Consensus Estimate for adjusted EPS is pegged at $0.26 and revenues at $192 million, which exceeds the company’s guided range.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been five revisions lower for the current quarter. In the past month, the consensus estimate has shifted lower by 10.26% due to these changes.
At this time, Myriad Genetics' stock has a subpar Growth Score of 'D', however its Momentum is doing a lot better with a 'B'. Charting a somewhat similar path, the stock was allocated a grade of 'A' on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for value investors than momentum investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Interestingly, the stock has a Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.
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Why Is Myriad Genetics (MYGN) Up 15.8% Since the Last Earnings Report?
A month has gone by since the last earnings report for Myriad Genetics, Inc. (MYGN - Free Report) . Shares have added about 15.8% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Recent Earnings
Myriad Genetics reported adjusted earnings per share (EPS) of $0.26 in the second quarter of fiscal 2017, down 42.2% year over year. However, adjusted EPS beat the Zacks Consensus Estimate by 8.3% and surpassed the company’s guided range of $0.23–$0.25.
Including one-time items, the company reported net income of $5.9 million or earnings of $0.26 per share in the reported quarter, exhibiting a decline of 84% and 82%, respectively.
Revenues
Total revenue rose 3.3% year over year to $196.5 million. The figure also outpaced the company’s guidance of $188–$190 million. The top line also exceeded the Zacks Consensus Estimate of $191 million.
The year-over-year rise in the top line was primarily on account of sequential growth in hereditary cancer revenues and strong results from GeneSight.
Segment-wise, Molecular diagnostic tests (93.5% of total revenue) recorded total revenue of $183.9 million, up 1% year over year, mainly on account of EndoPredict testing revenues which surged 78% to $1.6 million. Prolaris testing revenues also rose 63% to $3.1 million. However, Hereditary cancer testing revenues dropped 13% year over year to $143.9 million, Vectra DA testing revenues fell 5% to $10.7 million and other testing revenues remained flat at $2.9 million.
On the other hand, Pharmaceutical and clinical service revenues (accounting for the rest) in the second quarter of 2017 grossed $12.6 million, reflecting year-over-year growth of 18%.
Margin Trends
Gross margin in the quarter under review contracted 160 basis points (bps) to 77.4%. According to management, this decline was due to unfavorable product mix with more revenues coming in from lower margin segments such as pharmaceutical and clinical services along with reduced fixed cost absorption on lower hereditary cancer revenues. Additionally, the company witnessed an impact from the full implementation of long-term contracts in hereditary cancer.
Operating expenses rose 29.2% to $139 million owing to a 32.5% rise in selling, general and administrative (SG&A) expenses to $120 million. Research and development (R&D) expenses rose 11.4% (to $19 million) in the reported quarter. Consequently, the operating margin contracted a stupendous 1348 bps, down 48.1%.
Financial Position
Myriad exited the second quarter of fiscal 2017 with cash, cash equivalents and marketable securities of $162.5 million, higher than $148.4 million at the end of first-quarter 2017. Year to date, cash used in operations totaled $28.5 million, down 65.2% year over year. Consequently, free cash flow was down to $29.0 million from $39.8 million a year ago. The company repurchased 6.0 million shares for $10 million during the second quarter of 2017.
Guidance
Myriad narrowed its earlier guidance for fiscal 2017. The company currently expects revenues in the range of $745–$755 million, compared to the earlier expectation of $740–$760 million. The Zacks Consensus Estimate of $760.2 million is above the range.
On the bottom-line front, the company expects to generate adjusted EPS in the band of $1.00–$1.05, reducing the higher end by $0.05 from the previous one ($1.00–$1.10). The current Zacks Consensus Estimate of 99 cents lies below Myriad's guidance.
Alongside, management has provided its outlook for the third quarter of fiscal 2017. The company estimates adjusted earnings per share at $0.23–$0.25 on total revenues of $188–$190 million. The Zacks Consensus Estimate for adjusted EPS is pegged at $0.26 and revenues at $192 million, which exceeds the company’s guided range.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been five revisions lower for the current quarter. In the past month, the consensus estimate has shifted lower by 10.26% due to these changes.
Myriad Genetics, Inc. Price and Consensus
Myriad Genetics, Inc. Price and Consensus | Myriad Genetics, Inc. Quote
VGM Scores
At this time, Myriad Genetics' stock has a subpar Growth Score of 'D', however its Momentum is doing a lot better with a 'B'. Charting a somewhat similar path, the stock was allocated a grade of 'A' on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for value investors than momentum investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Interestingly, the stock has a Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.