A month has gone by since the last earnings report for Myriad Genetics (MYGN). Shares have lost about 6.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Myriad due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Myriad Genetics Rides on Strong Molecular Diagnostics in Q3
Myriad Genetics reported adjusted earnings per share (EPS) of 46 cents in the third quarter of fiscal 2019, up 35.3% year over year. Adjusted EPS beat the Zacks Consensus Estimate by 4.5%.
On a reported basis, EPS was 9 cents in comparison with 13 cents in the year-ago quarter.
Total revenues were up 18.3% year over year to $216.6 million in the quarter under review. The figure, however, missed the Zacks Consensus Estimate by 0.8%.
Quarter in Detail
Segment-wise, Molecular diagnostic tests recorded total revenues of $200.5 million, up 18% year over year.
Within this segment, Hereditary Cancer testing revenues rose 4% to $117.6 million. EndoPredict testing revenues increased 22% year over year to $2.8 million in the quarter under review. Vectra testing revenues were $11.3 million, down 25% year over year while other testing revenues declined 19% to $1.7 million. Further, GeneSight testing revenues fell 3% year over year to $29.6 million in the reported quarter. Prolaris tests raked in revenues of $6.9 million, up 8% year over year. Prenatal testing revenues came in at $30.6 million.
Pharmaceutical and clinical service revenues in the quarter under review totaled $16.1 million, reflecting a year-over-year increase of 17%.
Gross margin in the quarter under review expanded 165 basis points (bps) to 77.6%. Research and development (R&D) expenses rose 16.2% year over year (to $21.5 million) along with a 30.3% increase in selling, general and administrative (SG&A) expenses (to $140.6 million) in the reported quarter. Adjusted operating income was $5.9 million, down 53.2% year over year. The adjusted operating margin came in at 2.7%, showing a contraction of 416 bps.
Myriad Genetics exited third-quarter fiscal 2019 with cash, cash equivalents and marketable securities of $149.7 million compared with $165.4 million at the end of the preceding quarter. Year to date, net cash provided by operating activities came in at $52.2 million compared with $68 million in the year-ago period.
Myriad Genetics has updated the guidance for fiscal 2019 revenues. The company expects fiscal 2019 revenues to be $856 million, as compared to the earlier provided range of $855-$865 million. The Zacks Consensus Estimate for the metric is pegged at $862.43 million, higher than the projection.
On the bottom-line front, the company now expects adjusted EPS of $1.74 as compared to the previous guidance of $1.70-$1.75. The current Zacks Consensus Estimate for the metric is $1.74, in line with the current projection.
Management has also provided the guidance for the fourth quarter of fiscal 2019. The company estimates adjusted EPS of 48 cents on total revenues of $220 million. The Zacks Consensus Estimate for adjusted EPS stands at 49 cents, above the company’s guided figure. Our consensus estimate for revenues is $224.9 million, above the company’s guided figure.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month. The consensus estimate has shifted -5.33% due to these changes.
At this time, Myriad has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Myriad has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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