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Genomic Health (GHDX) Hits a 52-Week High: What's Driving It?

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On Sep 11, shares of Genomic Health, Inc. (GHDX - Free Report) scaled a 52-week high of $64.61, closing the session marginally lower at $64.46.

Over the past year, Genomic Health has rallied 104.7% against the industry’s decline of 15.2%. The current level is also higher than the S&P 500 index’s gain of 15.6%.

The California-based developer and marketer of genomic-based clinical tests for cancer diagnosis is expected to scale new highs in the near term. The company has delivered positive earnings surprise in three of the trailing four quarters, the average beat being 302.6%.

The estimate revision trend for the current year is impressive as well. Over the past 30 days, the Zacks Consensus Estimate for earnings per share inched up 14.9% to 54 cents.

The stock carries a Zacks Rank #3 (Hold).

Factors Working in Favor

Breast Cancer Reimbursement Prospects Bright

So far, Genomic Health has been witnessing healthy progress with regard to establishing coverage for its Oncotype DX breast cancer test. During the second quarter, the company delivered more than 33,590 Oncotype DX test results, up 6% year over year. Further, U.S. invasive breast cancer revenues grew 13% year over year.

Notably, the company witnessed quarterly test volume growth of 4%. This beat the growth of 3% recorded in 2017. Per management, the Oncotype DX Breast Recurrence Score market adoption has almost reached 60%, courtesy of continued strong demand.

In 2018, Genomic Health expects several key catalysts to drive revenues. These include the implementation of both PAMA reimbursement at a higher level than the 2016 invasive breast rate and AJCC staging criteria. Further, the recently-published ECOG-ACRIN Cancer Research Group TAILORx study results will provide impetus. 

In fact, Genomic Health expects PAMA market-based pricing to have an $8-million impact on the top line in 2018, which has already resulted in over a 10% increase in the company’s Medicare rate.

Strong Prostate Cancer Test Adoption

Genomic Health’s U.S. prostate cancer business has steadily accelerated over the last few quarters. The company has seen increased adoption of this test on private reimbursement. Second-quarter revenues in this business rose 63% 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.

Moreover, two studies supporting the favorable impact of the Oncotype DX GPS test on risk assessment in clinically low-risk prostate cancer patients in real-world practice were presented at the 2018 American Urological Association Annual Meeting.

Geographical Expansion Impressive

Genomic Health is focused on 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 second quarter of 2018, international test revenues increased low double-digits year over year.

The company has also witnessed a slew of developments like receipt of public coverage with the province of New Brunswick for using the Oncotype DX Breast Recurrence Score test in early-stage breast cancer patients with node-negative disease in its international business.

Other Key Picks

Other top-ranked stocks in the broader medical space are Intuitive Surgical (ISRG - Free Report) , Amedisys, Inc. (AMED - Free Report) and Masimo Corporation (MASI - Free Report) .

Intuitive Surgical’s long-term expected earnings growth rate is 14.7%. The stock carries a Zacks Rank of 1 (Strong Buy) currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Amedisys’ long-term expected earnings growth rate is 18.6%. The stock holds a Zacks Rank #1 at present.

Masimo’s long-term expected earnings growth rate is 14.8%. The stock has a Zacks Rank #2 at the moment.

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