Jefferies has updated its financial outlook for Myriad Genetics (NASDAQ: NASDAQ:MYGN), increasing the price target to $22 from $20, while maintaining an Underperform rating on the stock. The adjustment follows Myriad Genetics’ second-quarter financial results, which reported revenues of $211.5 million, surpassing analyst expectations by $5 million or 2%.
The company experienced a 9% year-over-year growth in overall test volume, with notable increases in Prenatal and Genesight testing, and a 19% increase in Hereditary Cancer Testing (HCT).
Myriad Genetics also modified its 2024 revenue guidance, raising it to $835-845 million, which is a $10 million enhancement at the midpoint compared to previous estimates and 1% higher than the market's forecast.
This change reflects a strong performance in the first half of the year, the impact of international restructuring, and modest market share gains from competitors such as Invitae (OTC:NVTAQ). Gross margin (GM) projections were tightened to a range of 70-70.5%, a slight improvement from the prior 69.5-70.5% guidance.
Operational expenses (opex) for the year are now expected to be between $575-585 million, a minor increase of $3 million at the midpoint. This anticipates a 7% rise in opex for the second half of the year to support growth and strategic development.
Further down the profit and loss statement, the company raised its EBITDA guidance to $25-35 million, a $5 million boost from the previous midpoint. Additionally, earnings per share (EPS) estimates were increased from $0.08 to $0.12, up from the prior $0.00 to $0.05 range.
In an unexpected move, Myriad Genetics also increased its long-range plan (LRP) for revenue growth to 12% from the previously stated 10%. This revision comes on the back of recent execution successes, volume growth, and increased confidence in the reimbursement profile with a decrease in no-pays.
Prior to this update, analysts had expected approximately 7-8% growth, but current models now anticipate about 9% growth. Jefferies has adjusted its own financial models to align with the updated 2024 guidance and revised LRP, now projecting roughly 9% growth in 2025 and 2026 compared to the 8% previously estimated.
Myriad Genetics shares are currently trading at approximately 3 times enterprise value to revenues. The new price target of $22 is based on 2 times the estimated 2025 revenues.
Myriad Genetics's second-quarter revenue beat consensus expectations by 2.5%, a result that has been instrumental in TD Cowen's decision to maintain a Hold rating on the company's shares and raise the price target to $30.00 from the previous $28.00. This adjustment comes after the company reported stronger-than-anticipated margins and free cash flow.
Scotiabank also initiated coverage on Myriad Genetics with a Sector Outperform rating and a price target of $29.00, recognizing the company's potential for growth and sustainable profitability. Similarly, Piper Sandler has raised its price target for Myriad Genetics to $28, maintaining an Overweight rating. The firm updated its revenue and earnings per share (EPS) forecasts for 2024, 2025, and 2026, predicting steady growth.
InvestingPro Insights
Myriad Genetics has been a subject of keen interest following its recent financial performance and updated guidance. According to InvestingPro data, the company boasts a market capitalization of $2.51 billion, and despite a negative P/E ratio of -15.54, reflecting its current lack of profitability, analysts have reasons for optimism. A significant highlight is the 14.78% revenue growth over the last twelve months as of Q2 2024, indicating a solid trajectory in sales. Moreover, the company's stock has experienced a substantial return over the last year, with a 56.23% price total return, which aligns with the upward revisions in earnings by analysts for the upcoming period.
InvestingPro Tips suggest that Myriad Genetics operates with a moderate level of debt and is expected to become profitable this year, as per analyst predictions. These factors, combined with the company's strategic developments and market share gains, may offer a compelling narrative for investors. It's worth noting that Myriad Genetics does not pay a dividend, which could influence investment decisions depending on individual preferences for income-generating stocks.
For those interested in delving deeper into the financial health and future prospects of Myriad Genetics, InvestingPro provides additional tips and analysis to help investors make informed decisions. As of now, there are a total of 9 InvestingPro Tips available for MYGN, which can be accessed for further insights.
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