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Should You Continue to Retain MYGN Stock in Your Portfolio?

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Myriad Genetics, Inc. (MYGN - Free Report) is making notable strides in its key strategic areas, which is poised to help it grow in the upcoming quarters. New product introductions and enhancements are gaining traction with customers. There is growing optimism about the company’s huge potential in the oncology space. Meanwhile, the impacts of macroeconomic pressure and fierce rivalry can be worrisome for Myriad Genetics’ performance.

In the past year, this Zacks Rank #3 (Hold) company has outperformed both the industry and the S&P 500 composite. Shares have surged 63.8% compared with the industry’s 0.7% rise and the S&P 500’s gain of 25.7%.

The renowned genetic testing and precision medicine company has a market capitalization of $2.51 billion. MYGN’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 213.4%.  

Let’s delve deeper.

Tailwinds for MYGN

Progress With Three Strategic Priorities: Myriad Genetics is advancing in developing top-quality products, building new enterprise capabilities and executing key initiatives to drive long-term growth and profitability. MYGN is gaining shares in the hereditary cancer market. The prenatal business grew 25% year over year in the second quarter of 2024, with a 12% increase in testing volumes due to ongoing initiatives to improve average selling prices (ASPs).GeneSight revenues increased 22% from the comparable 2023 period on nearly 129,000 tests in the second quarter.

Myriad Genetics announced several new strategic partnerships, including a collaboration with the National Cancer Center Hospital East in Japan to study the prognostic and predictive value of molecular residual disease (MRD) testing. It focuses its capital on new tech-enabled tools and capabilities, innovation and commercial capabilities that will improve the customer experience, such as the Labs of the Future program.

Product Launches and Upgrades: Myriad Genetics continues to gain customer acceptance for its slew of products. In June 2024, the company launched the Foresight Carrier Screening test with a new Universal Plus Panel. The anticipated guideline expansion by the American College of Obstetricians and Gynecologists for carrier screening is likely to broaden the market opportunity for this test and drive increased adoption and revenue per test improvements.

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Earlier this year, the company received a patent from the United States Patent and Trademark Office, which bolsters its ability to deliver a tumor-informed, high-definition MRD assay to the market. It also made enhancements to the GeneSight Psychotropic test — a pharmacogenomic test for mental health medications — in 2023.

Huge Potential in Oncology Testing: Myriad Genetics has identified the key opportunities to grow its Oncology business by expanding companion diagnostics, capturing markets through new clinical guidelines and introducing new offerings. In the second quarter of 2024, growth in hereditary cancer testing revenues reflected the company’s ongoing efforts to improve average revenue per test by expanding payer coverage and improving revenue cycle processes, which are helping reduce the no-pay rate. The addition of Intermountain Precision Genomics has broadened its oncology testing options, bringing Precise Tumor and Precise Liquid tests in-house.

As part of the strategic reorganization of its European operations, the company has sold its EndoPredict business to Eurobio Scientific, giving the right to sell Prolaris in vitro diagnostic kits outside of the United States. The reorganization and sale are expected to boost MYGN’s adjusted operating income annually by more than $4 million by streamlining the cost structure. The development of the Precise MRD assay also advances.

Factors Weighing on MYGN

Macroeconomic Concerns: With active operations internationally, the company is prone to several regulatory, political, operational, financial and economic risks. The curtailment of trade and other business restrictions and global inflationary pressure can result in higher costs of retaining skilled employees, producing test results and procuring lab supplies, denting its profitability. In the second quarter, Penumbra recorded a 4% jump in selling, general and administrative expenses due to a $2.6 million increase in compensation costs.

Increasing Competition: Myriad Genetics is currently facing growing competition in its key BRACAnalysis market as more players make their entry. The company expects the rivalry to intensify, with other companies potentially launching molecular diagnostic tests. In our opinion, competitive headwinds might push down prices for the high-priced tests provided by Myriad Genetics. This might deter margin improvement in the future.

MYGN Estimate Trend

In the past 30 days, the Zacks Consensus Estimate for the company’s 2024 earnings has increased 11.1% to 10 cents.

The Zacks Consensus Estimate for 2024 revenues is pegged at $840.3 million, suggesting an 11.6% rise from the year-ago reported number.

Top MedTech Stocks

Some better-ranked stocks in the broader medical space are TransMedix Group (TMDX - Free Report) , AxoGen (AXGN - Free Report) and Boston Scientific (BSX - Free Report) . While TransMedix Group currently sports a Zacks Rank #1 (Strong Buy), AxoGen and Boston Scientific each carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

TransMedix Group’s earnings are expected to surge 259.7% in 2024. Its shares have soared 156.5% compared with the industry’s 17.5% rise in the past year.

TMDX’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 287.5%.

AxoGen has an estimated 2024 earnings growth rate of 94.1% compared with the industry’s 12.8%. Shares of the company have soared 165.9% compared with the industry’s 17.6% rise over the past year.

AXGN’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 96.5%.

Boston Scientific has an estimated earnings growth rate of 17.1% compared with the industry’s 14.9%. Shares of the company have rallied 57.5% compared with the industry’s 19.5% rise over the past year.

BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 7.2%.

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