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On Thursday, Leerink Partners updated their outlook on Myriad Genetics (NASDAQ:MYGN), increasing the price target to $40.00 from the previous $35.00, while maintaining an Outperform rating on the shares. This adjustment follows Myriad Genetics' Investor Day, which took place on Wednesday, where CEO Paul Diaz and his team outlined the company's key growth drivers and long-term financial goals.
During the event, Myriad Genetics reaffirmed its long-term guidance, aiming for a revenue compound annual growth rate (CAGR) of over 12% and setting a target to reach over $1 billion in revenue by 2026. The company anticipates that its hereditary cancer testing segment, which accounts for approximately 45% of its revenue, will see growth in the low double digits. This is expected despite the market for its MyRisk hereditary cancer test being largely penetrated, with Myriad estimating over 70% market penetration.
Additionally, the company's pharmacogenomics offerings, which make up around 20% of revenues and include the GeneSight test, are projected to grow in the low teens. This growth projection remains despite earlier concerns in the quarter related to Myriad discontinuing part of an economic impact study on the assay. The prenatal testing segment, also representing about 20% of revenue, is expected to expand in the mid-teens, with potential upside from expanded testing guidelines and services.
Tumor profiling, which comprises roughly 15% of Myriad's revenue, is forecasted to grow in the low single digits. However, management highlighted that new products, such as minimal residual disease (MRD) testing, could offer additional growth potential. Despite significant investments in the business, Myriad Genetics' management expects to achieve adjusted profitability by the end of 2024 and targets a double-digit EBITDA margin by 2026.
The updated outlook and price target by Leerink Partners reflect the incorporation of Myriad's third-quarter preannouncement and additional details provided by management regarding long-term growth expectations across different segments. The firm's analyst expressed increased confidence in Myriad Genetics' transformation and growth prospects following the Investor Day presentations.
In other recent news, Myriad Genetics reported a slight third-quarter revenue beat, with figures between $210-212 million, surpassing the Street's expectation of $210 million. The company also reaffirmed its 2024 revenue guidance of $835-845 million. This comes after JPMorgan reiterated its Underweight rating on Myriad Genetics, maintaining a $20 price target. On the other hand, BofA Securities held an Underperform rating for the company, expressing caution regarding the company's financial targets.
The company also announced collaborations with The University of Texas MD Anderson Cancer Center and The University of Rochester Medical Center, focusing on breast cancer molecular residual disease testing research. Myriad Genetics' Precise MRD test is anticipated to launch commercially in 2026.
However, Myriad Genetics discontinued part of its GeneSight study due to disparities in baseline hospital resource utilization and costs between the tested and control groups. Despite this, Wells Fargo listed Myriad Genetics among its high-conviction ideas for sustained growth into 2025.
InvestingPro Insights
Myriad Genetics' recent investor day and the subsequent analyst update from Leerink Partners paint an optimistic picture for the company's future. This outlook is further supported by real-time data from InvestingPro, which offers additional context to the company's financial position and market performance.
According to InvestingPro data, Myriad Genetics has demonstrated strong revenue growth, with a 14.78% increase over the last twelve months as of Q2 2024. This aligns well with the company's stated goal of achieving a revenue CAGR of over 12%. The company's market capitalization stands at $2.1 billion, reflecting investor confidence in its growth strategy.
However, it's important to note that Myriad Genetics is currently not profitable, with a negative operating income of $103.3 million over the last twelve months. This underscores the importance of management's goal to achieve adjusted profitability by the end of 2024, as mentioned in the article.
InvestingPro Tips highlight that while the stock has taken a big hit over the last week, it has shown a high return over the last year, with a 51.08% price total return. This volatility is consistent with the company's ongoing transformation and market expectations for future growth.
For investors seeking a more comprehensive analysis, InvestingPro offers 7 additional tips for Myriad Genetics, providing a deeper understanding of the company's financial health and market position.
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