On Thursday, JPMorgan reiterated its Underweight rating on Myriad Genetics (NASDAQ:MYGN) with a price target of $20.00, following the company's investor day in New York.
Myriad Genetics outlined its long-term (LT) financial targets, projecting a compound annual growth rate (CAGR) for revenue of over 12% from 2024 to 2026. The company also aims to keep gross margins (GMs) above 70% while planning to increase operating expenses by 6-7% annually to achieve double-digit adjusted EBITDA margins by 2026.
Myriad Genetics announced a slight third-quarter revenue beat, with figures between $210-212 million compared to the Street's expectation of $210 million. The company reaffirmed its 2024 revenue guidance of $835-845 million, in line with Street forecasts of $841 million. Management expressed confidence in maintaining average selling prices (ASPs), which have recently shown positive trends, as opposed to the historical annual pricing compression of 3-5%.
The investor day also provided insights into Myriad Genetics’ product pipeline, highlighting the Precise MRD test, which is anticipated to launch commercially in 2026 with breast cancer as the initial indication. The company showcased improvements across operational, commercial, and portfolio areas as part of its turnaround strategy.
Despite Myriad Genetics’ strong financial performance over the past year, driven by internal improvements and favorable market conditions, JPMorgan noted that the sustainability of these factors, particularly about the new LT ASP targets, is uncertain.
The firm also pointed out that the ambitious profitability targets present a significant challenge as Myriad Genetics introduces new products into competitive markets. Consequently, JPMorgan advises a cautious stance on the stock, maintaining the $20 price target set for December 2025.
In other recent news, Myriad Genetics reported second-quarter revenues of $211.5 million, exceeding consensus expectations. The company subsequently raised its 2024 guidance to an estimated $835-845 million. Analyst firms including Wolfe Research, Scotiabank, Jefferies, and TD Cowen reacted positively to these developments, raising their price targets for the company.
Myriad Genetics has been advancing in breast cancer molecular residual disease (MRD) testing research through collaborations with The University of Texas MD Anderson Cancer Center and The University of Rochester Medical Center. The company's efforts are focused on studying the predictive power of circulating tumor DNA (ctDNA) levels in various treatment scenarios.
However, BofA Securities maintained its Underperform rating for Myriad Genetics, expressing caution regarding the company's financial targets. The firm noted a lack of clear, near-term catalysts that could significantly elevate the company's stock value. Despite this, Wells Fargo listed Myriad Genetics among its high-conviction ideas for sustained growth into 2025.
In other company developments, 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 setback, the company continues to make strides in the genetic testing and precision medicine field.
These are the recent developments for Myriad Genetics.
InvestingPro Insights
Recent InvestingPro data provides additional context to Myriad Genetics' financial situation and market performance. Despite JPMorgan's cautious stance, the company has shown strong revenue growth, with a 14.78% increase in the last twelve months as of Q2 2024, reaching $802.2 million. This aligns with Myriad's projected revenue CAGR of over 12% from 2024 to 2026.
However, profitability remains a challenge, as indicated by the negative operating income of $103.3 million in the same period. This underscores JPMorgan's concerns about the company's ambitious profitability targets.
InvestingPro Tips highlight that 6 analysts have revised their earnings upwards for the upcoming period, suggesting some optimism about Myriad's near-term performance. Additionally, the stock has demonstrated a high return over the last year, with a 59.07% price total return, reflecting the market's positive reception of the company's turnaround efforts.
For investors seeking a more comprehensive analysis, InvestingPro offers 7 additional tips for Myriad Genetics, providing deeper insights into the company's financial health and market position.
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