It has been about a month since the last earnings report for Myriad Genetics, Inc. MYGN . Shares have added about 18.6% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is MYGN 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 reported adjusted earnings per share (EPS) of 31 cents in the third quarter of fiscal 2018, up 14.8% year over year. Moreover, adjusted EPS beat the Zacks Consensus Estimate of 27 cents and exceeded the company's guided range of 26-28 cents.
Reported earnings came in at 16 cents, compared with 6 cents a year ago.
Total revenues were down 1.7% year over year to $193.5 million in the quarter under review. The figure however outpaced the Zacks Consensus Estimate of $187.9 million and was above the company's guidance of $186-$188 million. The year-over-year decline was however caused by price reductions in long-term contracts related to Hereditary cancer testing.
Further, the company believes unfavorable weather conditions across the United States had an adverse impact of around 1-2% on third-quarter test volumes.
However, the decline was partially offset by growing new product volumes, better-than-expected hereditary cancer volumes and the success of the company's Elevate 2020 program. Moreover, this was the fifth consecutive quarter in which the company witnessed year-over-year Hereditary cancer volume growth led by encouraging response to the newly-launched riskScore test under its myRisk Hereditary Cancer testing portfolio.
Quarter in Details
Segment-wise, Molecular diagnostic tests (92.9% of total revenue) recorded total revenues of $179.7 million, down 3% year over year on account of a 12.4% decline in Hereditary cancer testing revenues to $123.3 million. Also, Hereditary Cancer testing revenues declined due to price reductions in long-term contracts. However, volume growth exceeded the company's 3% growth target on a year-over-year basis.
EndoPredict testing revenues remained flat year over year at $2.3 million in the reported quarter. Vectra DA testing revenues came in at $15 million, up 33.9% year over year, while other testing revenues declined 38.9% to $2.2 million. Further, GeneSight testing revenues rose 27.2% year over year to $30.4 million in the reported quarter. Prolaris tests raked in revenues of $6.5 million in the quarter, up 91.2% year over year.
Pharmaceutical and clinical service revenues (accounting for the rest) in the quarter totaled $13.8 million, reflecting a year-over-year increase of 17.9%.
Gross margin in the quarter under review contracted 30 basis points (bps) to 77.2%. According to management, the gross margin performance was affected by Hereditary Cancer test pricing issue, partially offset by improved efficiencies in production process a result of the Elevate 2020 program and rising new product reimbursements for Vectra DA and Prolaris tests.
Operating expenses contracted 4.4% to $133.6 million as a 5.1% rise in research and development (R&D) expenses (to $18.5 million) was offset by a 5.7% fall in selling, general and administrative (SG&A) expenses (to $115.1 million) in the reported quarter.
Myriad Genetics exited the fiscal third quarter with cash, cash equivalents and marketable securities of $157.3 million, compared with $143.5 million at the end of the preceding quarter. Year to date, cash flow from operations totaled $68 million, compared with $69.6 million a year ago. Year to date, the company registered free cash flow of $61.4 million, compared with $64.2 million in the year-ago period.
Myriad Genetics has raised the guidance for fiscal 2018 revenues to $771-$773 million from $760-$770 million. The Zacks Consensus Estimate of $774.4 million lies above the guided range.
On the bottom-line front, the company lifted the adjusted EPS range to $1.19-$1.21 from $1.11-$1.16. The current Zacks Consensus Estimate of $1.16 is below the company's guided range.
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. The Zacks Consensus Estimate for adjusted EPS is 31 cents and revenues is $197.8 million. While the consensus estimate for earnings coincides with the low end of the company's guided range, our revenue estimate lies above the projected range.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. There have been seven revisions higher for the current quarter.
Myriad Genetics, Inc. Price and Consensus
Myriad Genetics, Inc. Price and Consensus | Myriad Genetics, Inc. Quote
At this time, MYGN has a poor Growth Score of F, however its Momentum is doing a lot better with a C. The stock was also allocated a grade of C on the value side, putting it in the middle 20% 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.
Zacks style scores indicate that the company's stock is suitable for value and momentum investors.
Estimates have been trending upward for the stock and the magnitude of these revisions looks promising. Interestingly, MYGN has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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