Company Reports

No-moat Myriad Genetics delivered strong first-quarter results ahead of expectations, with sales up roughly 12% year over year, composed of high-single-digit volume growth and about 2% pricing growth. The stock rose significantly on what we view as investor optimism at the contribution from pricing growth following a period of tough pricing dynamics. Nevertheless, we are holding our $21 fair value estimate steady, as our 2024 estimates remain intact and in line with unchanged guidance, and our longer-term outlook for the firm has not changed. Even with the positive rally, shares remain relatively fairly valued.

No-moat Myriad Genetics’ 2023 results landed slightly ahead of our expectations on robust volume growth across the portfolio. The firm announced guidance for 2024 that was slightly better than our previous assumptions. We've raised our fair value estimate to $21 per share, up from $18.50, after revising our forecasts to reflect growth over the near term from strong testing volumes and continuing market share gains. At current prices, shares look fairly valued.

Myriad Genetics started out as the monopoly in hereditary breast cancer diagnostics. Its oldest test was BRACAnalysis, a predictive test for mutations tied to an increased risk of hereditary breast or ovarian cancer. It had exclusive testing rights with patents on isolated BRCA1 and BRCA2 genes until a 2013 Supreme Court decision ruled that isolated DNA cannot be patented, stripping away the company's intellectual property in its hereditary cancer suite. Since then, Myriad has tried to pivot to a more diverse diagnostic portfolio that builds on its expertise in hereditary diagnostics while moving into new markets, including hereditary predisposition for a range of cancers, noninvasive prenatal testing, and efficacy of drugs for depression.

We make no change to our $18.50 fair value estimate for no-moat Myriad Genetics, as third-quarter results landed largely as expected. Overall revenue growth of 14% year over year was driven by continued momentum in testing volume growth across the product portfolio, including strong volume growth year over year in hereditary cancer at 18%, pharmacogenomics at 19%, and prenatal (excluding contributions from Sneak Peak) at 20%. Solid revenue growth demonstrates healthy demand for the firm's core offering and led management to raise its full-year 2023 topline growth estimate to 10%-11%, up about 100 basis points at the midpoint. We made similar adjustments to our full-year revenue expectations, but with no material impact on our valuation. At current prices, Myriad's shares look about fairly valued.

Myriad Genetics delivered solid second-quarter results driven by strong volume performance that increased the top line 10% year over year (excluding a one-time adjustment from the prior-year period). We are maintaining our $18.50 fair value estimate for the no-moat firm as the results landed roughly as we expected. At current prices, the shares look fairly valued.

Myriad Genetics started out as the monopoly in hereditary breast cancer diagnostics. Its oldest test was BRACAnalysis, a predictive test for mutations tied to an increased risk of hereditary breast or ovarian cancer. It had exclusive testing rights with patents on isolated BRCA1 and BRCA2 genes until a 2013 Supreme Court decision ruled that isolated DNA cannot be patented, stripping away the company's intellectual property in its hereditary cancer suite. Since then, Myriad has tried to pivot to a more diverse diagnostic portfolio that builds on its expertise in hereditary diagnostics while moving into new markets, including hereditary predisposition for a range of cancers, noninvasive prenatal testing, and efficacy of drugs for depression.

We’re maintaining our fair value estimate for Myriad Genetics at $18.50 per share following solid first-quarter results that position the firm to meet our forecast for the year as well as to meet our forecast for continued high-single-digit top-line growth over the next several years and a return to full-year adjusted profitability by 2025. Myriad’s top line grew by 10% compared with the first quarter of 2022, with solid double-digit volume growth partly countered by product mix changes (growing revenue from prenatal test SneakPeek) and tough comparisons, given a positive $12 million adjustment in the first quarter of last year that was not repeated. Growth was spread across women’s health (9%), oncology (11%), and mental health (9%). While we’re encouraged by the 31% increase in GeneSight testing volumes, and we expect continued strong demand in the coming years as a result of expanded access, new reimbursement codes have translated to lower prices, and we’ve slightly lowered our forecast for 2023 GeneSight sales. On the other hand, oncology tests are performing strongly, with particularly strong sales of prostate cancer test Prolaris, and we’ve slightly increased our oncology sales estimates for the year. Myriad’s bottom line remained solidly in the red due to high selling, general, and administrative costs, although we expect that Myriad will begin to see improved leverage from its tenured salesforce and digital selling efforts in coming quarters. Overall, we think shares look slightly overvalued and that the firm’s portfolio of hereditary cancer, women’s health, and mental health tests do not support an economic moat. We’re looking for evidence of Myriad’s success with stabilizing pricing and implementing cost controls before increasing our fair value estimate.

Myriad Genetics reported a strong fourth quarter, growing revenue 11% year over year, with solid full-year results slightly higher than our 2022 projections. Quarterly results were driven by hereditary cancer and pharmacogenomics volume growth of 16% and 23%, respectively, while Myriad saw reported revenue decline of 2% for the full year. We maintain our fair value estimate of $18.50, and shares appear fairly valued.

Myriad Genetics started out as the monopoly in hereditary breast cancer diagnostics. Its oldest test was BRACAnalysis, a predictive test for mutations tied to an increased risk of hereditary breast or ovarian cancer. It had exclusive testing rights with patents on isolated BRCA1 and BRCA2 genes until a 2013 Supreme Court decision ruled that isolated DNA cannot be patented, stripping away the company's intellectual property in its hereditary cancer suite. Since then, Myriad has tried to pivot to a more diverse diagnostic portfolio that builds on its expertise in hereditary diagnostics while moving into new markets, including hereditary predisposition for a range of cancers, noninvasive prenatal testing, and efficacy of drugs for depression.

Myriad Genetics started out as the monopoly in hereditary breast cancer diagnostics. Its oldest test was BRACAnalysis, a predictive test for mutations tied to an increased risk of hereditary breast or ovarian cancer. It had exclusive testing rights with patents on isolated BRCA1 and BRCA2 genes until a 2013 Supreme Court decision ruled that isolated DNA cannot be patented, stripping away the company's intellectual property in its hereditary cancer suite. Since then, Myriad has tried to pivot to a more diverse diagnostic portfolio that builds on its expertise in hereditary diagnostics while moving into new markets, including hereditary predisposition for a range of cancers, noninvasive prenatal testing, and efficacy of drugs for depression.

No-moat Myriad Genetics reported a weak third quarter, with sales declining 2% year-over-year, driven by macroeconomic headwinds and sales declining in almost all areas of the company's portfolio except for GeneSight. We have made adjustments to our near-term assumptions that reflect the current macroeconomic environment, volume, and product mix, bringing down our fair value estimate to $18.50 per share from $21.50. Given the market's negative reaction to Myriad's third-quarter results, shares still appear slightly undervalued.

In its second quarter, no-moat Myriad Genetics saw a 7% increase in revenue year over year (excluding revenue from divested businesses) despite macroeconomic headwinds like wage and supply chain inflationary pressures. We are maintaining our $21.50 fair value estimate, which is slightly under recent prices. Although the average selling price decreased 2% from last year, diagnostic test volume was 9% year over year. Significant revenue growth occurred in the prenatal, tumor profiling, and pharmacogenomics business, making up for lackluster results in hereditary cancer testing.

No-moat Myriad Genetics saw an 11% increase in revenue year over year even with an estimated $7 million-$9 million negative impact on revenue as a result of access restraints and staffing challenges from COVID-19. We are maintaining our fair value estimate of $21.50 per share, which is close to the current share price. Even with test volume and revenue declining from hereditary cancer testing, overall revenue growth was driven by stable and growing test volume from Myriad’s prenatal, tumor, and mental health tests and 1% year-over-year growth in average selling price.

No-moat Myriad Genetics saw a 24% increase in full-year revenue from the previous year, despite COVID-19-related setbacks, and we expect to slightly increase our fair value estimate, which is currently $21.50. Even so, at first glance shares still appear slightly overpriced. Revenue growth was driven by strong growth from one of Myriad’s top revenue drivers, GeneSight, year-over-year growth in Myriad’s prenatal business, and an increase in average selling price relative to the previous period. As a new commercial strategy was a main point of Myriad’s 2021 growth strategy, Myriad has successfully executed on this in terms of product launches, technology-enabled capabilities that have improved revenue cycles, and more customer centric tools. Hereditary cancer still lagged this past quarter as revenue decreased 9% compared with the previous period, partially due to a spike in COVID-19 cases that hampered voluntary cancer screenings.

Myriad Genetics started out as the monopoly in hereditary breast cancer diagnostics. Its oldest test was BRACAnalysis, a predictive test for mutations tied to an increased risk of hereditary breast or ovarian cancer. It had exclusive testing rights with patents on isolated BRCA1 and BRCA2 genes until a 2013 Supreme Court decision ruled that isolated DNA cannot be patented, stripping away the company's intellectual property in its hereditary cancer suite. Since then, Myriad has tried to pivot to a more diverse diagnostic portfolio that builds on its expertise in hereditary diagnostics while moving into new markets, including hereditary predisposition for a range of cancers, noninvasive prenatal testing, and efficacy of drugs for depression.

After taking a fresh look at Myriad Genetics, we have assigned it with a fair value estimate of $21.50, a no-moat rating, and a stable moat trend. Myriad’s product portfolio includes hereditary cancer, tumor profiling, prenatal, and pharmacogenomics in which Myriad aims to use genetic insights to improve patient care while lowering healthcare costs.

Due to seasonally lower summer sales as well as the rise of the delta variant, Myriad Genetics saw third-quarter revenue fall roughly 12% from the prior-year period, which was consistent with our expectations. We are leaving our $21.50 fair value estimate intact. Shares remain overvalued, from our perspective. Women’s health saw a 12% decrease sequentially while oncology saw a decrease of 2% sequentially. Amidst the impacts of COVID-19 and seasonality, GeneSight, under Myriad’s mental health unit, still reported strong numbers with 7% revenue growth sequentially driven by volume and stable pricing. Although Myriad has launched new innovations such as RiskScore and paired offerings with MyRisk in oncology, we still deem Myriad a no-moat company based on continued pricing pressure in hereditary cancer and overall uncertainty around long-term profitability, given Myriad’s product offering and the genetic testing environment.

Myriad Genetics saw total revenue grow 9% sequentially in the second calendar quarter of 2021 driven by roughly 8% diagnostic testing volume growth and 2% price growth, with improving gross margins and a return to non-GAAP profitability for the first time since the start of the pandemic. We've raised our fair value estimate to $21.50 per share from $15.10 as we incorporate a more sustainable growth trajectory for Myriad's core products and a higher long-term EBI growth rate. These changes were partly countered by our decision to incorporate potential U.S. tax reform into our valuation, as we now use a probability-weighted 26% U.S. tax rate in our model beginning in 2022. Although we think recent divestments and restructuring are putting Myriad on much better footing, we continue to see Myriad as a no-moat firm, based on continued pricing pressure and uncertainty around long-term profitability of its product portfolio.

Myriad Genetics started out as the monopoly in hereditary breast cancer diagnostics. Its oldest test was BRACAnalysis, a predictive test for mutations tied to an increased risk of hereditary breast or ovarian cancer. It had exclusive testing rights with patents on isolated BRCA1 and BRCA2 genes until a 2013 Supreme Court decision ruled that isolated DNA cannot be patented, stripping away the company's intellectual property in its hereditary cancer suite. Since then, Myriad has tried to pivot to a more diverse diagnostic portfolio that builds on its expertise in hereditary diagnostics but moves into new markets, including hereditary predisposition for a range of cancers, efficacy of drugs for depression, and more. While Myriad was an early mover in oncology, it has transformed into a player in different specialties such as women’s health, neuroscience, autoimmune, urology, and dermatology. In hereditary cancer, Myriad has largely phased out its single syndrome tests for BRCA1 and BRCA2 genes in favor of its multigene testing panel, myRisk and riskScore, a more comprehensive gene panel that identifies risk for cancer related to women’s health. The company has several near-term coverage opportunities for testing in rheumatoid arthritis, prostate cancer, and prenatal screening. Its main value driver is GeneSight, a pharmacogenomic test that helps with therapeutic selection for treatment resistant depression.

No-moat Myriad Genetics reported third-quarter results that surpassed our expectations, posting overall revenue of about $173 million, representing roughly 6% growth compared with the previous year. So far, the company has delivered on its long-term transformation plan, resetting its cost base and core operations. We are raising our fair value estimate to $15.10 per share from $11 as we reflect this strength and stronger demand for its core products in our model.