On Oct 15, 2014, Zacks Investment Research upgraded Genomic Health Inc. (GHDX) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
Share price of Genomic Health has rallied up since the company, in collaboration with the Uniformed Services University of the Health Sciences (USU) Center for Prostate Disease Research (CPDR), released positive results from an additional independent clinical validation study of the Oncotype DX prostate cancer test.
This study restated Genomic Prostate Score (GPS) as a predictor of adverse pathology at surgery for the first time and validated GPS as a strong independent predictor of a rise in prostate-specific antigen (PSA) following surgery (biochemical recurrence). The study also proved that Oncotype DX is equally successful in both Caucasian and African-American men.
Earlier, Genomic Health had reported better-than-expected second-quarter 2014 results with both the top and the bottom line surpassing the respective Zacks Consensus Estimate. Moreover, it had delivered a stellar performance in the international market during the quarter, with robust revenue growth of 29.3%.
On the international reimbursement front, currently, the company retains exclusive distribution agreements for the sale of its breast cancer tests with distributors covering more than 90 countries. At present, Genomic Health covers a population of more than 120 million people with its breast cancer test specimen.
Although the company's Oncotype DX colon cancer test is yet to contribute significantly to top-line growth, currently Genomic Health covers 5 million lives in the U.S. for Stage II colon cancer. A health economic analysis recently published in the PharmacoEconomics journal revealed that the Oncotype DX colon cancer test can potentially reduce direct medical expenses while improving patients' health.
Currently, the company is approaching additional public and private payors and health plans to secure coverage for its colon cancer test, supported by clinical evidence validating the test’s utility.
Strong overall performance since the second quarter earnings release has prompted a rise in the Zacks Consensus Estimate for earnings for 2014 and 2015 in the last 90 days. The estimate improved to a loss of 80 cents from a loss of 88 cents in 2014. For 2015, the estimate increased to a loss of 61 cents from a loss of 68 cents over the same time-frame. The expected long-term growth rate for the stock is 15.8%.
Other Stocks to Consider
Some other well-placed stocks from the Med-Biomed/Generic industry are Medivation, Inc. (MDVN), Halozyme Therapeutics, Inc. (HALO) and Myriad Genetics Inc. (MYGN). All three stocks carry a similar Zacks Rank #1.
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