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Myriad (MYGN) Up 18.4% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Myriad Genetics (MYGN - Free Report) . Shares have added about 18.4% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Myriad 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.

Myriad Genetics Lags Q1 Earnings

Myriad Genetics, Inc.  reported adjusted earnings per share  of 8 cents in the first quarter of fiscal 2020, reflecting an 81.4% slash year over year. Adjusted EPS also lagged the Zacks Consensus Estimate by 75.8%.

On a reported basis, loss per share was 28 cents, wider than the prior-year loss of a penny.

Revenues

Total revenues dropped 7.9% year over year to $186.3 million in the quarter under review. The figure also missed the Zacks Consensus Estimate by 8.2%.

Quarter in Detail

Segment-wise, Molecular diagnostic tests recorded total revenues of $172 million, down 9% year over year.

Within this segment, Hereditary Cancer testing revenues were down 10% year over year to $104.5 million. EndoPredict testing revenues fell 4% year over year to $2.3 million in the quarter under review. Vectra testing revenues were $11 million, down 15% year over year while other testing revenues declined 40.7% to $1.6 million.

Further, GeneSight testing revenues fell 22% year over year to $22.7 million in the reported quarter. Prolaris tests raked in revenues of $6.5 million, up 5% year over year. Prenatal testing revenues came in at $23.5 million, up 30%.

Pharmaceutical and clinical service revenues in the quarter under review totaled $14.3 million, reflecting a year-over-year increase of 8%.

Margin Trends

Gross margin in the quarter under review contracted 211 basis points (bps) to 73.3%. Research and development (R&D) expenses rose 0.9% year over year to $21.3 million along with a 4.3% increase in selling, general and administrative (SG&A) expenses to $135.5 million in the reported quarter. Adjusted operating loss was $20.2 million against adjusted operating profit of $1.6 million in the year-ago period.

Financial Position

Myriad Genetics exited first-quarter fiscal 2020 with cash and cash equivalents of $89.9 million compared with $93.2 million at the end of the preceding year. At the end of the first quarter, net cash provided by operating activities was $15.8 million compared with $7.8 million at the end of the year-ago period.

2020 Guidance

Myriad Genetics has lowered the guidance for fiscal 2020 revenues. The company expects fiscal 2020 revenues within $800-810 million, compared to the earlier band of $865-$875 million. The Zacks Consensus Estimate for the metric is pegged at $874.3 million, above the company’s projection.

On the bottom-line front, the company lowered adjusted EPS to the band of $1.00-$1.10, compared to the earlier projection of $1.80-$1.90. The current consensus estimate for the metric is $1.83, which lies above the current projection.

Management has also provided the guidance for the second quarter of fiscal 2020. The company estimates adjusted earnings in the range of 30-32 cents and total revenues of $210-$212 million. The Zacks Consensus Estimate for adjusted earnings stands at $48, above the company’s guided figure. Our consensus estimate for revenues is $219.8 million, above the company’s guided figure.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -44.67% due to these changes.

VGM Scores

Currently, Myriad has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Myriad has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.


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