Myriad Genetics Inc. (MYGN) reported second quarter fiscal 2010 earnings of 36 cents per share, two cents above the Zacks Consensus Estimate. The company had earned 22 cents in the year-ago period. The year-ago earnings were inclusive of a loss of $15.6 million from discontinued operations pertaining to Myriad’s former research and pharmaceutical businesses.
Detailed Quarterly Results
Myriad posted a net profit of $35.4 million, which represented a 67% rise from the year-ago quarter. This increase in profitability was attributable to the company’s improved gross profit margin in the reported quarter of 88% as against 87% in the first quarter of fiscal 2010.
Molecular diagnostic revenues for the quarter came in at $92.8 million as against $84.0 million in the prior-year quarter, a 10.5% increase. The improvement was attributable primarily to Myriad’s increased sales and marketing efforts.
Operating income for the reported quarter came in at $34.5 million, as against $33.3 million last year. Research and development expenses for the quarter stood at $5.1 million as against $4.6 million for the same period last year. The 10.8% increase was attributable to increased investment in its product pipeline and new product development.
Selling, general and administrative expense for the quarter came in at $42.1 million compared with $35 million in the prior-year quarter. The 20.3% increase was attributable to costs associated with revenue growth in the quarter.
The company exited the quarter with approximately $458 million in cash, cash equivalents and marketable investment securities, as against $392.2 million at the end of fiscal 2009.
We remind investors that the company had spun off its therapeutics business in 2009 to exclusively focus on its core molecular diagnostics business. Consequently, Myriad Genetics will be able to pursue its long-term strategic initiatives, maximize its core technology strengths, seek new product opportunities and have a capital structure appropriate for its financial profile.
Estimate Revisions Trend
Over the last 30 days, 3 of the 18 analysts following the stock have reduced their earnings estimates for the next quarter while one analyst has increased earnings estimates over the same time period. Fiscal 2010 estimates have also been revised downwards by 3 of the 19 analysts following the stock over the last 30 days with no upward revisions. We also saw two downward revisions for fiscal 2011 over the last 30 days.
However, the revisions are not significant with estimates for fiscal 2010 and fiscal 2011 going down by just a cent over the last 30 days. Consequently, there is no major directional pressure on the performance of the stock in the upcoming quarters.
As a result, our short-term as well as long-term recommendations on the stock are Hold (Zacks Rank #3) and Neutral respectively. The Zacks Consensus estimates for the next quarter and fiscal 2010 are 41 cents and $1.47 respectively.
Read the full analyst report on “MYGN”
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