We recently reiterated our Neutral recommendation on Myriad Genetics (MYGN).
Myriad reported an EPS of $0.24 for the first quarter of fiscal 2011, beating the Zacks Consensus Estimate by a penny. However, the EPS was 22.6% lower compared to $0.31 in the year-ago period. Revenues were $91.9 million, up 7.9% compared with the year-ago quarter’s $85.1 million, but missed the Zacks Consensus Estimate of $93.0 million.
The company derives a majority of its revenues from Oncology, which increased 4.3% year over year to $66 million. Revenues derived from woman’s health grew 18.4% to $25.8 million. Despite a 7.9% growth in revenues, Myriad’s EPS was lower compared to the year-ago quarter due to a decline in interest and other income and $13.6 million of income tax provision, partially offset by a 4.5% decline in share count.
Bracanalysis, assessing a woman’s risk of hereditary breast and ovarian cancer, is the biggest revenue contributor to the company’s top line. We consider Bracanalysis as a valuable asset for top line growth of Myriad as it has the potential to expand into a large untapped market.
We are encouraged by the company’s various initiatives to attain this objective.These include ovarian cancer initiative targeting women with a family history of cancer, penetration into triple negative breast cancer patients, focus on carcinoma in situ (CIS) and establishing Bracanalysis as a companion diagnostic product for PARP inhibitors. These strategies are expected to increase the revenue potential going ahead.
To further strengthen its portfolio, Myriad intends to launch Panexia, a predictive medicine product for hereditary pancreatic cancer by the year-end. There are about 43,000 pancreatic cancer patients diagnosed each year and it is the fourth leading cause of cancer-related deaths in the US, behind lung, colon and breast cancer.
With a strong cash balance, Myriad is well placed to expand its product portfolio and target new territories. Its bottom line is expected to strengthen further with its share buyback program. Meanwhile, results from the company’s direct-to-consumer (DTC) campaign have been encouraging so far.
However, Myriad continues to suffer from adverse economic conditions and competition from players like Hologic (HOLX) and Abbott (ABT). The macro environment had a negative impact on Myriad despite the company’s increased sales and marketing efforts.
ABBOTT LABS (ABT): Free Stock Analysis Report
HOLOGIC INC (HOLX): Free Stock Analysis Report
MYRIAD GENETICS (MYGN): Free Stock Analysis Report
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