Myriad Genetics Inc.
) climbed 15.12% to $31.29 ever since the company announced its
decision to enter the huge potential autoimmune diagnostic market
through the acquisition of Crescendo Bioscience. A healthy second
quarter fiscal 2014 result, declared on the same day, also
contributed to the gain.
Myriad announced the acquisition of
- an autoimmune diagnostics company. Myriad has agreed to pay
$270 million for the transaction, $25 million of which will repay
Crescendo's outstanding loans.
This agreement seems to be beneficial for Myriad from multiple
aspects. The acquisition will allow the company to expand its
portfolio of diagnostic tests beyond breast cancer and enter the
autoimmune diagnostic market. According to Myriad, this
acquisition will enable the company to access Crescendo's core
product Vectra DA, which has a $3 billion global market
This acquisition will also strengthen the foothold of Myriad
as a leader in the protein diagnostic market because the
technology and products of Crescendo will help to improvise the
existing product pipeline at Myriad and complement the protein
expertise at Myriad RBM.
Myriad is optimistic about the acquisition and expects this to
create fresh demand for Crescendo's products globally. It is
expecting the deal to generate significant operating profits in
the future. Fiscal 2016 onwards, the acquisition is also expected
to be accretive to earnings.
Solid Quarterly Numbers
Myriad also exited the second quarter of fiscal 2014 on an
encouraging note. It reported earnings per share of 66
cents, up a stupendous 57.1% year over year. It also surpassed
the Zacks Consensus Estimate by a remarkable 40.4%. The top line
also beat the Zacks Consensus Estimate of $178 million and
increased 37% to $204.1 million.
Following the recent developments, an enviable portfolio of
products and an attractive pipeline, Myriad raised its revenue
and earnings outlook for fiscal 2014. It expects revenues in the
range of $740-$750 million, higher than the prior forecast of
$700-$715 million implying annualized growth of 21% to 22%. The
current Zacks Consensus Estimate of $708 million remains far
below the company's guidance.
Myriad currently predicts its earnings to vary between $2.09
and $2.12 per share, higher than the previously guided range of
$1.92 and $1.97. The revised outlook reflects growth of 18% to
20%. However, the Zacks Consensus Estimate for the same is pegged
at $1.97 per share, which falls below the guided range.
The higher-than-expected guidance and the acquisition of
Crescendo are deemed to be encouraging for Myriad.
Currently, the stock carries a Zacks Rank #3 (Hold).
Better-placed stocks that are worth a look include
Biogen Idec Inc.
), each sporting a Zacks Rank #1 (Strong Buy).
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