Why Is Genomic Health (GHDX) Up 7.1% Since the Last Earnings Report?
A month has gone by since the last earnings report for Genomic Health, Inc.GHDX . Shares have added about 7.1% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it 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.
Genomic Health, Inc . (GHDX) reported first-quarter 2017 loss per share of $0.07, reflecting an improvement from the year-ago quarter's loss figure of $0.19. The quarter's number is however wider than the Zacks Consensus Estimate of a loss of $0.06.
Net income in the reported quarter was $1.4 million against net loss of $2.7 million in the year-ago quarter.
Revenues in Detail
Total revenue in the quarter rose 3.8% year over year to $84.0 million but missed the Zacks Consensus Estimate of $86 million. Growth across the U.S. and international markets drove the top line.
Geographically, first-quarter product revenues in the U.S. improved 0.1% to $70.6 million. The U.S. product revenue growth was fueled by invasive breast cancer revenue growth of 1.1% as well as 26.9% contribution from Prostate test revenues. International product revenues were $13.4 million in the reported quarter, up 29%, and 33% on a CER basis.
During the quarter, the company delivered more than 31,580 Oncotype DX test results, up 7% year over year.
In the quarter under review, Genomic Health's gross margin expanded 369 basis points (bps) year over year to 83.7%. Apart from significant top-line growth, the improvement in gross margin was a result of a 15.4% decline in cost of product revenues to $13.6 million.
Genomic Health also witnessed a 0.5% fall in operating expenses to $73.1 million owing to a 9.1% decrease in general and administrative expenses to $16.8 million and a 4.7% fall in research and development expenses to $14.8 million. However, selling and marketing expenses rose 5.1% to $41.5 million.
In the reported quarter, Genomic Health recorded an operating loss of $2.8 million, wider than an operating loss of $0.8 million incurred in the prior-year quarter.
Genomic Health exited first-quarter 2017 with cash and cash equivalents and short-term marketable securities (including a corporate equity investment) of $94.4 million, reflecting a slight improvement from $87.7 million recorded at the end of Dec 31, 2016.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month. There has been one revision lower for the current quarter. In the past month, the consensus estimate has shifted downward by 260% due to these changes.
Genomic Health, Inc. Price and Consensus
At this time, Genomic Health's stock has a strong Growth Score of 'A', though it is lagging a bit on the momentum front with an 'B'. The stock was allocated a grade of 'D' on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is more suitable for growth than momentum based on our styles scores.
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.