Myriad Alleviates to Outperform - Analyst Blog
22 December 2012 - 3:10AM
Zacks
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
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MERIT MEDICAL (MMSI): Free Stock Analysis Report
MYRIAD GENETICS (MYGN): Free Stock Analysis Report
RESMED INC (RMD): Free Stock Analysis Report
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THORATEC CORP (THOR): Free Stock Analysis Report
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