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Myriad Genetics Inc MYGN

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Raising Our Myriad Genetics FVE Following a Solid 2Q, but Shares Remain Overvalued

Karen Andersen, CFA Sector Strategist

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.

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Company Profile

Business Description

Myriad Genetics is a molecular diagnostics company that provides testing services designed to assess an individual’s risk of developing a disease. The firm produces myRisk, a 35-gene panel with the capability to identify the elevated risk of developing eight types of cancer. Other diagnostic products include BRACAnalysisCDx, the FDA-approved companion diagnostic for PARP inhibitors; GeneSight, which helps improve responses to psychotropic drugs for patients suffering from depression; Vectra DA, which predicts disease progression in rheumatoid arthritis to optimize drug treatment; and Prolaris, which identifies prostate cancer patients that can pursue active surveillance. The firm offers biomarker discovery and companion diagnostic services to pharma and biotech companies.

320 Wakara Way
Salt Lake City, UT, 84108
T +1 801 584-3600
Sector Healthcare
Industry Diagnostics & Research
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type Distressed
Employees 2,700