Can Molecular Diagnostics Drive Myriad's (MYGN) Q4 Earnings?

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Myriad Genetics, Inc. MYGN is scheduled to report fourth-quarter fiscal 2018 results on Aug 14, after the closing bell.

Last quarter, the company posted a positive earnings surprise of 14.8%. Moreover, Myriad Genetics beat the Zacks Consensus Estimate in the trailing four quarters, the average being 20.8%.

Let's take a look at how things are shaping up prior to this announcement.

Factors at Play

Similar to last quarter, Myriad Genetics is expected to gain from strong Molecular Diagnostics performance, led by solid contributions from the GeneSight, EndoPredict and Prolaris tests.

GeneSight Test

Per the company, as the GeneSight test is placed in a highly under-penetrated preventive care market, the product has huge potential. Management expects consistent growth in revenues from the test.

Furthermore, the company recently presented encouraging data related to the test from a large, well-controlled pharmacogenomics study on major depressive disorder (MDD). This has resulted in a commercial coverage decision for GeneSight from a top-20 payer in the Mid-Atlantic region.

EndoPredict Test

Over the last few months, Myriad Genetics has been making steady progress with the EndoPredict test. During the second quarter of fiscal 2018, the company announced the finalization of LCD from Noridian for EndoPredict, thereby expanding the test's coverage to around 90% of the U.S. market.

Further, the National Institute for Health and Care Excellence (NICE) in the United Kingdom issued a revised Diagnostics Consultation Document (DCD) that covers EndoPredict as one of the three approved prognostic tests. Notably, the company projects more than 26,000 breast cancer patients in the United Kingdom annually, which would be eligible for breast cancer prognostic signature. 

Prolaris Test

Management expects double-digit volume growth in fiscal 2018 for GeneSight, Vectra DA and Prolaris tests. Notably, all of these make up the chunk of the Molecular Diagnostics portfolio.

Prolaris testing volumes grew double digits in the last reported quarter. We are encouraged by the company's receipt of seven new commercial coverage decisions for the test.

During the fiscal fourth quarter, Myriad Genetics announced that the payers represent six million new covered lives for Prolaris. Plus, per the company, the payers include one of the top 25 commercial insurers in the United States.

Myriad Genetics, Inc. Price and EPS Surprise

Myriad Genetics, Inc. Price and EPS Surprise | Myriad Genetics, Inc. Quote

Myriad Genetics noted that this acceleration in commercial insurer coverage for Prolaris has come close on the heels of the recently updated National Comprehensive Cancer Network (NCCN) guidelines, which support Prolaris as the standard of care in making treatment decisions for patients suffering from low and favorable-intermediate risk prostate cancer.

With this development, Prolaris now provides insurance coverage to 50% of prostate cancer patients in the United States.

Hereditary Cancer Testing

We expect Myriad Genetics to continue to see year-over-year growth in Hereditary Cancer volumes. Moreover, the previously reported quarter was the fifth consecutive quarter wherein volume growth was led by encouraging response to the newly launched riskScore test under its myRisk Hereditary Cancer testing portfolio.

Also, during the fiscal third quarter, the company begun well-planned commercialization of BRACAnalysis CDx to roughly 3,000 oncologists. Consequently, the company witnessed a 70% rise in metastatic breast cancer testing in comparison to the second quarter of fiscal 2018. This momentum is expected to get maintained in the to-be-reported quarter as well.

In April, the company received manufacturing and marketing approval for its BRACAnalysis Diagnostic System in Japan. Notably, the company projects more than 15,000 cases in Japan which are eligible for testing with BRACAnalysis CDx. This development is expected to boost the top line in the to-be-reported quarter.

Management has provided the guidance for the fourth quarter of fiscal 2018. The company estimates adjusted EPS of 31-33 cents on total revenues of $193-$195 million.

Meanwhile, unfavorable foreign currency translation continues to be a risk. With a considerable portion of revenues coming from outside the United States, the company faces the risk of exchange rate fluctuations. Additionally, the company apprehends a decline in pharmaceutical and clinical services segment revenues in the to-be-reported quarter due to seasonally reduced patient visits in spring in comparison to winter.

Further, the Zacks Consensus Estimate for fourth-quarter revenues of $195.8 million reflects a decline of 2.4% from the year-ago quarter.

Earnings Whispers

Our proven model shows that Myriad Genetics is likely to beat earnings this quarter. That is because a stock needs to have both a positive  Earnings ESP   and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is the case here as you will see below.

Earnings ESP : Myriad Genetics has an Earnings ESP of +5.71%.

Zacks Rank : Myriad Genetics carries a Zacks Rank #3, which increases the predictive power of ESP.  You can uncover the best stocks to buy or sell before they're reported with our  Earnings ESP Filter .

The Zacks Consensus Estimate for fourth-quarter 2018 adjusted earnings of 33 cents reflects an increase of 10% over the year-ago quarter.

Other Stocks Worth a Look

Here are a few other stocks worth considering as they have the right combination of elements to beat estimates this time around.

National Vision Holdings, Inc. EYE has an Earnings ESP of +2.70% and a Zacks Rank #2. You can see  the complete list of today's Zacks #1 Rank stocks here .

Advance Auto Parts, Inc. AAP has an Earnings ESP of +2.22% and a Zacks Rank of 2.

Best Buy Co., Inc. BBY has an Earnings ESP of +0.55% and is a Zacks #2 Ranked company.

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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 Nasdaq, Inc.

This article appears in: Investing , Business , Earnings , Stocks
Referenced Symbols: AAP , MYGN , BBY , EYE

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