We forecast 2010 total revenues of $185 million, representing 24% growth over 2009. In 2011, we expect a 21% sales rise to $224 million.We see GHDX building sales momentum, aided by an expanded sales force, an increasing list of national insurers (including Aetna, United Healthcare and CIGNA) approving Oncotype DX reimbursement, and industry validation from the late 2007 inclusion in ASCO and National Comprehensive Cancer Network (NCCN) breast cancer treatment guidelines.
We forecast 2010 gross margins of around 77%, as higher test volumes yield lower per-test costs.We see potential for slightly lower gross margins in 2011 as the recently launched colon cancer test yields reduced efficiencies. GHDX has increased pipeline diagnostic investments and has expanded test processing capacity, enabling 49,000 test results to be delivered in 2009, 24% above 2008 levels.
Our 2010 EPS estimate is $0.07, and we forecast EPS of $0.72 for 2011. With GHDX's $57.4 million in cash and positive operational cash flows as of the end of 2009, we believe it is on solid financial footing.
We have a positive outlook for the Oncotype DX breast cancer diagnostic test, as we see medical treatment practices shifting toward personalized medicine tools.We are encouraged by U.S. reimbursement contract growth to cover more than 90% of U.S. insured lives.We expect a modest rollout of the newly launched colon cancer recurrence prediction test, but expect wider adoption as published study data furthers physician awareness.We see a long-term opportunity for Oncotype DX utility in such cancers as prostate and renal cancers as well as expanded colon cancer use.We expect GHDX's global expansion to occur slowly due to individual country regulatory requirements.
Risks to our recommendation and target price include potential for FDA regulation over GHDX's predictive tests, requiring clinical testing; emergence of new competitors; and slower- than-expected medical community adoption of predictive genetic testing.
Our 12-month target price of $23 applies a 3.5X multiple (a slight premium to diagnostic peers) to our 2010 revenue estimate of $185 million, based on the recent share count.