Myriad Tops Estimates; Tweaks View

Zacks

Myriad Genetics Inc. (MYGN) reported EPS of 42 cents in the second quarter of fiscal 2013, representing a beat of 10.5% over the Zacks Consensus Estimate. This denotes the second consecutive quarterly earnings beat for the company. The result also reflects year-over-year EPS growth of 27% for Myriad.

Revenues

Revenues climbed 21% year over year to $149.1 million, surpassing the Zacks Consensus Estimate of $144 million in the quarter. Growth was led by further penetration and expansion of end-markets for the company’s portfolio. Myriad derives revenues from sales of Molecular diagnostic tests (contributing 94.3%) and Companion diagnostic tests (contributing 5.7%).

Molecular diagnostic tests recorded revenues of $140.7 million, up 20% year over year. Molecular diagnostic testing revenues are derived from Oncology (up 16% to $90.9 million) and Women’s Health unit (up 27% to $49.8 million). The market penetration for the company’s oncology franchise is over 50% while the same for Women Health is lower than 10%.

While Myriad markets several molecular diagnostic products, its flagship product is Bracanalysis test (representing 74% of total revenues in the quarter), which studies BRCA1 and BRCA2 genes for assessing a woman's risk of developing hereditary breast and ovarian cancers. Revenues from Bracanalysis rose 9% on a year-over-year basis to $110.3 million in the quarter. Moreover, revenues derived from Colaris and Colaris AP tests (representing 8.1% of revenues), which assess a patient's risk of developing hereditary colorectal and uterine cancers, increased 10% to $12.1 million.

Over the recent past, the company has been working on receiving reimbursements for the BART test (representing 10.6% of total revenues) that recorded revenues of $15.8 million in the reported quarter. Revenues from other molecular diagnostic tests (representing 1.7% of total revenues) came in at $2.5 million.

Revenues from Companion diagnostic tests were $8.5 million, up 63% year over year. Growth was primarily driven by the company’s recent alliance with Sanofi (SNY).

Margins

Gross profit increased 21.1% year over year to $129.3 million. Gross margin, however, contracted marginally by 20 basis points (bps) to 86.7% in the quarter.

Operating expenses rose 20.3% to $73.7 million due to a 16.8% increase in selling, general and administrative (SG&A) expenses ($59.6 million) and a 37.7% jump in research and development (R&D) expenses ($14.1 million). Higher operating expenses incurred were due to the company’s attempts to support portfolio expansion, sales force expansion and deeper penetration in the international market. However, operating margin expanded 30 basis points to 37.3%.

Balance Sheet

Myriad exited the quarter with cash, cash equivalents and marketable securities of $468.3 million, an improvement from $454.2 million at the end of fiscal 2012. The company repurchased 1.2 million shares for $33.7 million during the quarter. The consistent share buyback program had a favorable impact on the company’s EPS as shares outstanding declined 2.3% year over year.

In a concerted effort to boost shareholder value, Myriad authorized a new $200 million share repurchase program. Going forward, the reduced share count should have a positive impact on the EPS.

Guidance

Based on the robust performance in the second quarter, Myriad revised its outlook for fiscal 2013. The company narrowed its guidance for revenues to the range of $575−$585 million (previous guidance was $570−$585 million), reflecting growth of 16%−18% (15−18%). The Zacks Consensus Estimate of $585 million tallied with the higher end of the revenue outlook. Further, the company envisages revenues from Companion diagnostic segment to be below the current level in the second half of fiscal 2013. Nonetheless, segment revenues are expected to hover around the high end of the earlier outlook of $25-$28 million.

Myriad raised its EPS outlook for the ongoing fiscal. It is likely to be in a range of $1.55−$1.58 ($1.50−$1.55 earlier), reflecting 19%-21% growth. The current Zacks Consensus Estimate of $1.58 is at the high end of the company’s guidance range.

Our Take

Myriad posted another strong quarter which surpassed expectations. While the Bracanalysis test remains the company’s flagship product, the BART test continues to gain traction. Further, the company has progressed well in receiving reimbursements for the BART test. Myriad is optimistic about growth opportunities in the European market, while its domestic market remains largely underpenetrated.

We believe that Myriad is set on a high growth trajectory. The estimate revision trend for the ongoing fiscal reflects a unanimous bullish sentiment towards Myriad. Accordingly, the stock carries a Zacks Rank #2 (Buy). Smith & Nephew (SNN) and ResMed (RMD), carrying a Zacks Rank #1 (Strong Buy), are also expected to do well and warrant a look.

Read the Full Research Report on SNN

Read the Full Research Report on RMD

Read the Full Research Report on SNY

Read the Full Research Report on MYGN

Zacks Investment Research



More From Zacks.com

Rates

View Comments (0)

Recommended for You

  • Tycoon buys 30 Rolls-Royces for Macau hotel

    A Hong Kong tycoon has placed the biggest ever order for Rolls-Royce cars, agreeing to buy 30 Phantoms to chauffeur guests at a luxury resort he's building in the global gambling capital of Macau. Stephen Hung's $20 million purchase surpasses the 14 Phantoms bought by Hong Kong's Peninsula Hotel in…

    Associated Press
  • Norwich Information Security MS

    Online, accredited, top ranked. NSA Center of Academic Excellence. Recognized by the Department of Homeland Security. Download your free brochure!

    AdChoicesNorwich UniversitySponsored
  • Tycoon's arrest sends shock wave through Russia

    Tycoon's arrest sends shock wave through Russia MOSCOW (AP) — The arrest of a Russian telecoms and oil tycoon has sent shock waves through the country's business community, with some fearing a return to the dark days of a decade ago, when the Kremlin asserted its power by imprisoning the country's…

    Associated Press
  • Before You Buy Alibaba, Check Out 4 Top China Stocks

    Before You Buy Alibaba, Check Out 4 Top China Stocks While investors gear up for Alibaba Group 's (BABA) hotly anticipated initial public offering, don't forget about other Chinese stocks that are worth keeping an eye on. Today's Young Guns Screen of

    Investor's Business Daily
  • As Fed takes baby steps, Cramer's trick for profit

    In turn, Cramer says making money in the market, involves looking at the environment through the lens of the Fed. "The trick is to remember that they speak for the common person," Cramer said. "The Fed wants the common person to make money." With that backdrop always in mind, Cramer says it becomes…

    CNBC
  • "The Retiree Next Door": How successful retirees stretch their savings

    "The Retiree Next Door": How successful retirees stretch their savingsBy the time she hit her late 40s, Toni Eugenia wasn’t sure she would ever be able to retire. Eugenia, 56, a pharmacy technician who lived in Houston, was nearly $200,000 in debt and

    Yahoo Finance
  • Costco Stores in Canada to Stop Taking American Express

    “The credit card relationship between American Express and Costco Wholesale Canada will not be renewed when it expires” on Dec. 31, the company said today in an e-mail to Canadian customers. The message was attributed to Lorelle Gilpin, vice president of marketing and membership for Costco…

    Bloomberg
  • CNBC Anchor Calls Out Fed-Hater Bill Fleckenstein In Startling Shouting Match

    CNBC Bill Fleckenstein of Fleckenstein Capital appeared on CNBC's Futures Now program on Tuesday. Futures Now host Jackie DeAngelis came out swinging, asking Fleckenstein right at the top if he was willing to admit that he had misunderstood monetary policy. Sounding taken aback, Fleckenstein…

    Business Insider
  • Master's Degree in Nursing

    CCNE accredited MS in nursing in as few as 18 months online. Learn more today!

    AdChoicesNorwich UniversitySponsored
  • Beanie Babies creator's sentence debated in court

    Beanie Babies creator's sentence debated in court CHICAGO (AP) — Federal prosecutors seeking to put the billionaire creator of Beanie Babies in prison for hiding millions in Swiss bank accounts told appellate court judges Wednesday that the toymaker's sentence of probation threatens to erode the…

    Associated Press
  • Play

    Citi, Bank of America Offer Discounted Mortgages

    Citigroup and Bank of America will offer mortgages at discounted interest rates to help borrowers with low incomes or subprime credit. AnnaMaria Andriotis joins MoneyBeat. Photo: Getty.

    WSJ Live
  • Apple to unveil new iPads, operating system on Oct. 21 : report

    The company plans to unveil the sixth generation of its iPad and the third edition of the iPad mini, as well as its operating system OS X Yosemite, which has undergone a complete visual overhaul, the Internet news website said. Trudy Muller, a spokeswoman for Apple, declined to comment. The iPad is…

    Reuters
  • Gilead Stock Is Falling On These Drug Setbacks

    Gilead Stock Is Falling On These Drug Setbacks Gilead Sciences (GILD) shares are backsliding Wednesday on news that the patient drop-out rate for hepatitis C drug Sovaldi is quadruple that of clinical trials. In addition, the biotech's Phase 2 study results

    Investor's Business Daily
  • Margaritaville casino owners seek bankruptcy

    The owner of Biloxi's Margaritaville casino has filed for Chapter 11 bankruptcy protection Tuesday, only hours before a hearing where the landlord aimed to seize the property. The filing by MVB Holding LLC in U.S. Don Dornan, a lawyer for landlord Clay Point LLC, said the company had planned to ask…

    Associated Press
  • Play

    What the Fed Meeting Means for Bonds

    Janet Yellen & Co. are expected to hint at their timetable for raising interest rates. Here's how investors should prepare ahead of the meeting.

    WSJ Live
  • Masters in Law Degree-Non JD

    Elevate your knowledge. Advance your career. Get Your Masters in Law. Online and Accredited. Graduate in Less Than 2 years. Free Brochure!

    AdChoicesChamplain CollegeSponsored
  • Embraer to sell 50 E-175 jets to Republic in $2.1 billion deal

    Brazil's Embraer SA, the world's third largest commercial planemaker, said on Wednesday it booked a firm order from U.S. The deal, which will be included in Embraer's order book for the third quarter, is valued at $2.1 billion, the planemaker said in a securities filing. The planes will be operated…

    Reuters
  • Here's What Mark Cuban Wishes He Knew About Money In His 20s

    Cuban is the owner of the Dallas Mavericks basketball team. Billionaire investor and entrepreneur Mark Cuban is generous with his advice. When we asked him what he wishes he'd known about money in his 20s, he said:

    Business Insider
  • SHOE COMPANY: Our CEO Just Disappeared And Most Of The Money Is Gone

    "and like that: he's gone." This is an actual headline from a company press release: "CEO and COO disappeared, most of the company's cash missing." (Via FastFT) In a statement, German-based shoe company Ultrasonic said its CFO,  Chi Kwong Clifford Chan, has been unable to reach the company's CEO,…

    Business Insider
  • Billionaire Investor Says Chinese People Work Harder And Western Companies Could Face Deep Trouble After Alibaba IPO

    Michael Moritz, the chairman of VC firm Sequoia Capital, is a huge fan of Chinese internet companies and reiterated his enthusiasm for the Chinese market in an interview with The Wall Street Journal Wednesday. The billionaire investor described the Alibaba IPO as a “major landmark event” that is as…

    Business Insider
  • Top Analyst Upgrades and Downgrades: AEP, BHP, GE, Incyte, 3M, Tyco, Under Armour and More

    Top Analyst Upgrades and Downgrades: AEP, BHP, GE, Incyte, 3M, Tyco, Under Armour and More Stocks were firm on Wednesday morning ahead of the FOMC meeting outcome. Tuesday’s rally may have sparked higher interest again, and investors are looking for bargains

    24/7 Wall St.
  • 6 Things Debt Collectors Wish You Knew

    The work debt collectors do is not popular, and has become increasingly derided by those who don’t like what we do or simply don’t know the facts about debt collection. Too often, debt collection is painted with a broad brush to create a portrait that isn’t accurate, and doesn’t properly educate…

    Credit.com
  • Take Your Career in Law to the Next Level!

    Earn an accredited Master of Laws in only 1 year. 100% online, No LSAT required, and 5 concentrations offered, including Taxation Law. Apply today!

    AdChoicesThomas Jefferson Law Sponsored
  • Boeing may have outfoxed Musk, but it could have bigger problems

    Elon Musk is arguably one of the greatest entrepreneurial minds of the 21st Century, but he was outsized an old school aerospace giant. Boeing won the bulk of NASA’s contract for a space taxi.  One of the other companies vying for the deal is SpaceX, the company headed by Tesla’s Musk, will get a…

    Talking Numbers