On May 15, we issued an updated research report on Myriad Genetics, Inc. (MYGN - Free Report) . The company is making significant progress as far as portfolio expansion is concerned. However, a tough competitive niche and pricing pressure might prove detrimental to Myriad’s stock in the near future. The stock carries a Zacks Rank #3 (Hold), at present.
Over the past six months, Myriad Genetics has underperformed the industry it belongs to. The stock plunged 42.3% against the industry’s 11.9% rise. Myriad Genetics exited third-quarter fiscal 2020 on a dull note, with earnings lagging the Zacks Consensus Estimate. While revenues beat the mark, the company saw a decline in operating segments due to the coronavirus outbreak.
Within Molecular Diagnostics, the majority of its test segments witnessed year-over-year revenue loss. The company experienced gross margin contraction due to escalation in costs and expenses and incurred operating loss during the quarter as well. Further, withdrawal of its guidance is concerning.
The top line, however, registered robust performance in the first two months of the quarter. EndoPredict testing boosted the top line and FDA approvals for myChoice CDx and BRACAnalysis CDx bode well. Potential in hereditary cancer testing instills optimism.
Once the coronavirus mayhem is over, Myriad Genetics expects to register an uptick in hereditary cancer volumes on account of its contract with UnitedHealthcare.
The company’s myPath Melanoma, which is in the preliminary stages of commercialization, has completed the first phase of the expanded launch and is being promoted to approximately 35% of the targeted market.
From a companion diagnostic perspective, the company witnessed significant progress with both BRACAnalysis CDx and myChoice CDx. In January 2020, the company submitted its application for BRACAnalysis CDx in castrate resistant metastatic prostate cancer, with the FDA approval anticipated to come in the latter half of fiscal 2020.
These developments are expected to result in a clinical impetus for patients of these two cancer types, including approximately 90,000 incident patients in the United States per year.
Meanwhile, Myriad Genetics faces acute competition in the key BRACAnalysis market. The company expects the same to intensify with newer advancements in this technology. We believe tough headwinds might reduce the prices of expensive tests provided by the company. This might, in turn, impede the stock’s margin improvement.
Some better-ranked stocks from the broader medical space are Aphria Inc. (APHA - Free Report) , Surmodics, Inc. (SRDX - Free Report) and Owens Minor, Inc. (OMI - Free Report) .
Aphria has a projected long-term earnings growth rate of 24.6%. It currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Surmodics’ long-term earnings growth rate is estimated at 10%. The company presently sports a Zacks Rank #1.
Owens Minor’s long-term earnings growth rate is estimated at 8.3%. It currently carries a Zacks Rank #2.
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