On Jan 14, 2015, Zacks Investment Research upgraded leading molecular diagnostic company Myriad Genetics Inc. (MYGN) to a Zacks Rank #2 (Buy).
Why the Upgrade?
Of late, Myriad has been witnessing rising earnings estimates. This Salt Lake City, UT-based company has a trailing four-quarter average beat of 12.74%. The long-term expected earnings growth rate for this stock also stands at an impressive 12.6%.With the company approaching its second-quarter fiscal 2015 earnings, events are shaping up favorably for investors.
Myriad is strategically well-positioned with innovative product launches and acquisitions. In a major breakthrough, last week, the company announced the CE Mark for its Tumor BRACAnalysis CDx test in Europe. The test identifies tumors that have mutations in the BRCA1 or BRCA2 genes. According to the company, this approval will allow it to offer a validated tumor-based test for use as a companion diagnostic with Lynparza and future PARP inhibitors in Europe.
Although Myriad’s revenue and earnings figures declined on a year-over-year basis in the first quarter of fiscal 2015, management remains impressed with the company’s business performance in the quarter. Primarily, it was the greater-than-expected demand for myRisk tests that increased the work-in-progress and laboratory expenses and in turn affected the quarter’s profitability.
During the last reported quarter, at the European Society of Medical Oncology meeting, Myriad showed that its tumor BracAnalysis CDx can identify approximately 44% more ovarian cancer patients who are likely to respond to olaparib than conventional germline BRAC testing. This significantly enhanced the potential market for olaparib and the significance of the BracAnalysis CDx test. However, the company currently tests only about 25% of the 22,000 newly diagnosed ovarian cancer patients in the U.S. annually. This implies that Myriad’s BracAnalysis test has significant untapped opportunity to capitalize on, going ahead.
The Zacks Consensus Estimate for earnings for fiscal 2015 has increased 5.4% to $1.94 per share over the last 90 days.
Other Stocks to Consider
Some other medical device companies also expected to outperform over the near term are ABIOMED, Inc. (ABMD), Hansen Medical, Inc. (HNSN) and Edwards Lifesciences Corp. (EW). All these stocks carry a Zacks Rank #2.
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