Analyst Note| Karen Andersen, CFA |
Myriad Genetics saw total revenue grow 9% sequentially in the second calendar quarter of 2021 driven by roughly 8% diagnostic testing volume growth and 2% price growth, with improving gross margins and a return to non-GAAP profitability for the first time since the start of the pandemic. We've raised our fair value estimate to $21.50 per share from $15.10 as we incorporate a more sustainable growth trajectory for Myriad's core products and a higher long-term EBI growth rate. These changes were partly countered by our decision to incorporate potential U.S. tax reform into our valuation, as we now use a probability-weighted 26% U.S. tax rate in our model beginning in 2022. Although we think recent divestments and restructuring are putting Myriad on much better footing, we continue to see Myriad as a no-moat firm, based on continued pricing pressure and uncertainty around long-term profitability of its product portfolio.