Here’s why you should hold Myriad Genetics (MYGN) Stock now

A myriad of genetics (MYGN Free Report) is well-prepared for growth in the coming quarters, supported by the strength of its oncology business. The company has launched a number of products in recent months. Progress in its transformation plan, growth initiatives and planned divestitures will provide MYGN with a foundation for continued long-term growth and profitability. However, rising expenses and a competitive space are concerning.

Over the past year, this Zacks Rank #3 (Hold) stock is up 23.7% versus the industry’s 8.4% decline and the S&P 500 composite’s 13.2% increase.

The renowned genetic testing and precision medicine company has a market cap of $1.86 billion. The company estimated earnings growth of 100% compared to the S&P 500’s 16.69%. Myriad Genetics has topped estimates in two of the past four quarters and missed the same in the other two, delivering an average negative earnings surprise of 65.13%.

Let’s go deeper.

Favorable winds

Huge potential in cancer testing: In the first quarter of 2023, Myriad Genetics’ Oncology business generated revenues of $77.6 million, with testing volumes of approximately 50,000. Prolaris continued to see strong demand as Q1 test volumes increased 22% year over year. Oncology hereditary cancer testing volume grew 16% year-over-year.

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During its first quarter earnings update, MYGN noted that FirstGene is complementary to the company’s current prenatal portfolio and serves more than one million patients in the United States. The company is preparing for a launch in the fourth quarter of this year. MYGN is also planning to expand its suite of precise oncology solutions, with the launch of a liquid biopsy test for tumor profiling in the second half of 2023.

Product launches: Last month, Myriad Genetics announced the addition of Folate Receptor Alpha to its Precise Oncology Solutions portfolio. In Q1, Myriad Genetics launched a unified ordering portal for the women’s health industry to streamline the ordering process for customers, particularly those ordering more than one Myriad product.

The company has also partnered with one of the largest independent providers of ambulatory medical imaging in the United States, SimonMed Imaging, to launch a new hereditary cancer risk assessment program. MYGN’s expanded partnership with Illumina will broaden its emerging biopharmaceutical business and access to HRD testing in the United States.

The transformation growth strategy is progressing well: In the first quarter of 2023, the company added many experienced leaders to the group to help drive further growth with improved operational efficiency.

MYGN continues to enhance its core commercial organization with prudent investments in technologies and innovations and is excited about FirstGene’s next generation prenatal offering Myriad Genetics. Recently, the company announced a partnership with ClinVar.

Downsides

Negatives Q1: In the first quarter, Myriad Genetics reported a contraction in gross margin and an operating loss due to increased costs and expenses, which is concerning. Adjusted operating expenses for the quarter reflect investments in sales and marketing programs, technology, research and development, additional operating expenses from Gateway Genomics and inflationary pressures.

Growing competition: According to management, MYGN expects competition to intensify in its current fields with the technological advancements seen recently. In our view, competitive headwinds could drive down the prices of expensive tests provided by Myriad Genetics. This may discourage margin improvement in the future.

Estimate trend

Zacks’ consensus estimate for MYGN’s 2023 loss per share has held steady at 33 cents over the past 30 days.

Zacks’ consensus estimate for the company’s 2023 revenue is pegged at $738.9 million. This suggests an 8.92% increase from the number reported a year ago.

Key choices

Some top-ranked stocks in the broader medical space are Zimmer Biomet (ZBH extension free report), Semi-darkness (QUILL Free Report) e Hologic, Inc. (HOLX extension free report).

Zimmer Biomet has an earnings yield of 5.22% compared to -1.40% in the industry. Zimmer Biomet’s earnings topped Zacks’ consensus estimate in all of the previous four quarters, by an average surprise of 7.38%. Its shares are up 36% compared to the industry’s 22.6% decline over the past year.

ZBH currently boasts a Zacks Rank #1 (Strong Buy). you can see the complete list of today’s Zacks #1 Rank stock here.

Penumbra, currently #1 on Zacks’ list, has an estimated growth rate of 64.1% for 2024. Penumbra’s shares are up 154.6% compared to the industry’s 10.8% increase in the last year.

PEN’s earnings beat estimates in all of the previous four quarters, by an average surprise of 109.4%.

Hologic, currently with a Zacks Rank #2 (Buy), has an earnings yield of 4.80% compared to -6.96% in the industry. HOLX’s shares are up 15.9% compared to the industry’s growth of 10.8% over the past year.

Hologic earnings beat estimates in all of the prior four quarters, by an average surprise of 27.3%.


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