On Tuesday, UBS began its coverage on shares of Myriad Genetics (NASDAQ:MYGN), assigning a Neutral rating to the stock with a price target of $18.00. The firm noted an improvement in Myriad Genetics' growth profile compared to historical trends, supported by a 12.2% revenue growth in the last twelve months.
However, concerns regarding GeneSight reimbursement were identified as a potential near-term issue for the stock. According to InvestingPro data, the stock is currently trading near its 52-week low of $14.34, with significant volatility in recent weeks.
According to the UBS analyst, while there is a positive growth trend in Myriad Genetics' hereditary cancer and prenatal businesses, the overall revenue growth is expected to stabilize at a high single-digit rate beyond 2025.
This projection is more conservative than the company's management's double-digit growth expectations. The analyst anticipates that the competitive advantages Myriad Genetics currently enjoys due to competitors exiting the market will dissipate by 2025. InvestingPro analysis shows that six analysts have recently revised their earnings downward for the upcoming period, though the company is expected to return to profitability this year.
The valuation of Myriad Genetics was also a point of discussion. UBS believes that the current market valuation of Myriad Genetics fairly represents its lower growth profile when compared to its peers. Additionally, the uncertainty surrounding the reimbursement for GeneSight, a pharmacogenomics test developed by Myriad Genetics, is seen as an overhang on the stock.
The UBS report suggests that while Myriad Genetics has potential in certain areas of its business, the overall growth rate is expected to moderate in the coming years. The company's stock price is considered to align with these growth expectations and the challenges it faces.
In other recent news, Myriad Genetics has been the focus of several significant developments.
Leerink Partners has downgraded the company's stock to Market Perform and reduced its 2025 growth estimate to 2.5%, down from previous estimates of 6% and 12%. The firm's revised rating reflects concerns about potential challenges such as Medicaid cuts, competitive pressures, and a potential policy change by UnitedHealth Group (NYSE:UNH) that could cease coverage of Myriad Genetics' GeneSight testing from 2025.
Scotiabank (TSX:BNS) also revised its price target for Myriad Genetics in light of these potential challenges. Despite this, Myriad Genetics remains committed to achieving approximately 12% revenue compound annual growth rate through 2026. The company is planning to launch the Precise MRD test for breast cancer in the first half of 2026 and has made significant investments in lab technologies, including EMR system integrations.
Furthermore, Myriad Genetics has settled a series of shareholder derivative lawsuits without admitting any liability or wrongdoing. As part of the settlement, the company will implement specified corporate governance reforms and pay up to $950,000 in attorneys' fees and expenses.
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