Myriad Genetics Q3 Test Growth Impresses Yet Revenues Fall - Analyst Blog

On May 8, 2015, we issued an updated research report on Myriad Genetics Inc.MYGN - a leading molecular diagnostic company that provides transformative tests that target the genetic basis of human diseases and the role these genes might play in the onset, progression and treatment of specific diseases.

Myriad delivered disappointing third quarter fiscal 2015 results with EPS merely in line and the top line short of the Zacks Consensus Estimate. Moreover, the guidance cut for fiscal 2015 is also intimidating.

However, management is impressed with the company's business performance during the period, particularly in view of the severe weather conditions faced across the northeast in January and February.

Notably, in the reported quarter, Myriad achieved a key milestone by acquiring a licensed German MVZ clinic near Munich, Germany. This is expected to facilitate the company's penetration into the German molecular diagnostic market. We believe this buyout will play a crucial role in Myriad gaining a foothold in the multi-billion dollar molecular diagnostic market.

During the third quarter, myRisk Hereditary Cancer revenues improved a massive 462.8% to $81.6 million on a year-over-year basis. Management is enthusiastic about the growing physician adoption of its myRisk tests. It further believes that the current trajectory of Myriad's Hereditary Cancer franchise positions the company well for the future. Moreover, Myriad is witnessing significant growth in Prolaris volumes, with incoming samples up 30% sequentially in the third quarter.

On the flip side, we are wary of the foreign currency fluctuation that might affect Myriad's overseas business in the near term. The dollar has currently strengthened affecting many U.S. companies trading in foreign currencies in the past few months. Increased competition and uncertainty owing to the conversion to myRisk also continues to pose a threat.

Currently, the Zacks Consensus Estimate for fiscal 2015 and 2016 stands at $1.46 and $1.80 per share, respectively.

The stock currently bears a Zacks Rank #4 (Sell).

Key Picks from the Sector

Medical stocks such as Actelion Ltd. ALIOF , Cytori Therapeutics, Inc. CYTX and Gilead Sciences Inc. GILD are worth a look. All the stocks sport a Zacks Rank #1 (Strong Buy).

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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.

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

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