Myriad Alleviates to Outperform - Analyst Blog

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Following a strong first quarter result and an encouraging guidance, we upgrade our recommendation on Myriad Genetics ( MYGN ), provider of molecular diagnostic products, to Outperform with a target price of $33.

Myriad started fiscal 2013 on a cheery note with 24% year over year growth in earnings per share to 36 cents, beating the Zacks Consensus Estimate of 32 cents. Total revenues surged 21% year over year to $133.4 million, sailing past the Zacks Consensus Estimate of $130 million.

Growth was led by Myriad's flagship product, Bracanalysis (78.7% of total revenues), which witnessed 17% year-over-year growth to gross $105 million in the first quarter. Moreover, the BART (Bracanalysis Rearrangement Technology) test is gaining traction. Revenues from BART test jumped 188% year over year to $7.6 million in the quarter. Additionally, revenues derived from Colaris and Colaris AP increased 26% year over year to $12.1 million.

Myriad's focus on expanding its geographic foothold particularly in Europe, is also encouraging. Despite macroeconomic headwinds, the company's expansion plan in Europe is on track with a goal to record $50 million of revenues from international operations by fiscal 2016.

While operating margin is under pressure due to higher expenditure on research and development as well as sales and marketing, it reflects Myriad's concerted efforts to enhance its pipeline on the back of innovation. Also worth mentioning in this context is that the company currently has 13 pipeline candidates and several agreements with pharmaceutical majors like Sanofi ( SNY ), Abbott Laboratories ( ABT ), Eli Lilly ( LLY ) and Johnson & Johnson ( JNJ ) among others to strengthen its presence in the companion diagnostic market.

Based on all these near-term catalysts that are expected to drive up demand for Myriad's offerings, the company made an upward revision in its fiscal 2013 guidance. Myriad now expects to report revenues of $570−$585 million (previous guidance was $550−$565 million), reflecting growth of 15−18% (11−14%). The earnings per share for the fiscal year is likely to be in a range of $1.50−$1.55 (earlier $1.44−$1.48).

We are bullish on Myriad's growth prospects. The stock carries a short-term Zacks #1 Rank (Strong Buy). Other Zacks #1 Rank (Strong Buy) stocks in the medical sector are ResMed ( RMD ), Thoratec ( THOR ) and Merit Medical ( MMSI ).



ABBOTT LABS (ABT): Free Stock Analysis Report

JOHNSON & JOHNS (JNJ): Free Stock Analysis Report

LILLY ELI & CO (LLY): Free Stock Analysis Report

MERIT MEDICAL (MMSI): Free Stock Analysis Report

MYRIAD GENETICS (MYGN): Free Stock Analysis Report

RESMED INC (RMD): Free Stock Analysis Report

SANOFI-AVENTIS (SNY): Free Stock Analysis Report

THORATEC CORP (THOR): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: ABT , JNJ , LLY , MMSI , MYGN

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