Myriad Genetics Poised on Strong Fundamentals – Analyst Blog

On July 9, we issued an updated research report on leading molecular diagnostic company Myriad Genetics Inc. ( MYGN ). While we are impressed with the company's strong fundamentals, as once again reflected in the last reported quarter's financial performance, we believe emerging competitors and pricing pressure amid a challenging macroeconomic scenario might plague the stock in the future.

Myriad Genetics' third-quarter fiscal 2014 earnings per share came in at 60 cents, registering a stupendous 30.4% beat over the Zacks Consensus Estimate. Earnings also exceeded the year-over-year adjusted EPS number by the same margin. Likewise, revenues increased 17% to $182.9 million, topping the Zacks Consensus Estimate of $174 million.

According to the company, it is perfectly in sync with its strategic initiatives of expanding the core hereditary cancer market, growing its international business and launching new life-saving products.

Banking on core market growth, specifically the Oncology and Women's Health business that led to another solid quarter, and several recent positive takeaways including the recent acquisition of Crescendo Bioscience; the three-year contract with United Healthcare to provide coverage for Myriad Genetics' myRisk Hereditary Cancer test; and the collaboration with Tesaro for the use of Myriad Genetics' proprietary HRD test to identify tumor subtypes that may respond to Tesaro, Inc. 's ( TSRO ) investigational new PARP inhibitor niraparib, Myriad has raised its revenue and EPS outlook for fiscal 2014.

Backed by sustained organic growth in the core segments, the rising uptake of the BART test, and its several growth strategies, we believe Myriad will achieve its fiscal 2014 guidance with ease.The increase in reimbursement rate by the Centers for Medicare and Medicaid Services (CMS) acts as another upside.

However, with an extensive pipeline of some tests still under Early-stage development, Myriad continues to experience higher expenses.Although the company expects to increase its addressable market with myRisk in the near future, we remain cautious owing to the market conversion phase with the discontinuance of the successful legacy products.

Other Stocks to Consider

Myriad Genetics currently carries a Zacks Rank #4 (Sell). However, some better-ranked stocks that are outperforming in the Biomedical sector are Actelion Ltd. ( ALIOF ) and Biogen Idec Inc. ( BIIB ), both with a Zacks Rank #1 (Strong Buy).

MYRIAD GENETICS (MYGN): Free Stock Analysis Report

TESARO INC (TSRO): Free Stock Analysis Report

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Myriad Genetics Poised on Strong Fundamentals - Analyst Blog