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By Shara Tibken Of DOW JONES NEWSWIRES NEW YORK (Dow Jones)--Shares of Myriad Genetics Inc.

(MYGN) dropped 27% Wednesday as investors feared the biopharmaceutical company's revenue warning could signal slowing demand.

Late Tuesday, Myriad said it expects the economic downturn to weigh on its fiscal fourth-quarter molecular diagnostics revenue, and it lowered its full-year view due to the impact of the recession.

The warning marks a reversal from the strong results Myriad posted earlier in its fiscal year.

"What worries us about the 4Q sales miss is it's impossible all of it was related to the economy - implying growth in testing of 'cancer' patients has slowed too," Oppenheimer analyst Amit Hazan said in a note, adding he was wrong to believe fourth-quarter numbers were safe.

Hazan lowered his stock-investment rating on Myriad to perform from outperform, joining at least two other firms in downgrading the company's rating.

A representative from Myriad wasn't immediately available to comment.

In recent trading, shares tumbled $9.53 to $26.12.

They have declined nearly 40% over the past three months but are still up about 7% over the past 12 months.

The biopharmaceutical company said it sees revenue for its molecular diagnostics segment, which made up nearly 99% of its total sales in the fiscal third quarter, to be about $86 million, a 33% increase.

Analysts polled by Thomson Reuters most recently forecast total sales of $92 million.

For the full year, the unit's sales are expected to grow 46% to about $326 million, down from its earlier projection of about $330 million.

The company blamed the lowered forecast on such economic factors like higher unemployment levels, which has resulted in workers losing insurance coverage and patients delaying or canceling doctor visits.

Many analysts weren't convinced the economy was the only factor weighing on results.

Several cited the slow uptake of the company's BRACAnalysis test in the obstetrics and gynecology market as a key issue.

The genetic test measures risk for breast and ovarian cancer based on the mutations of specific genes.

"While management attributes the flat sequential sales to the economic slowdown, our physician checks signal slower-than-expected adoption of BRACAnalysis in the OB/GYN community," Cowen & Co.

analyst Ian Sanderson said in a note, adding he maintained his neutral rating given uncertainty about the BRACAnalyasis growth outlook and the premium valuation on Myriad shares.

Meanwhile, Morgan Joseph analyst Shiv Kapoor lowered his rating on Myriad's shares to sell from buy, and RBC Capital analyst Michael J.

Yee cut the rating to sector perform from outperform.

"This is the second time in two successive quarters that the company has lowered its guidance for quarter-over-quarter sales growth," Kapoor wrote, adding that it's possible the most likely individuals to undergo BRACanalysis following Myriad's direct-to-consumer ads have now been exhausted, leading to slower growth.

Analysts also cited concerns about visibility for the next couple quarters.

RBC's Yee said that Myriad "quickly captured low-hanging fruit" in December from direct-to-consumer marketing, meaning there was less room for growth in the March quarter.

He added that there was no direct-to-consumer in the June quarter.

"However, we don't foresee any significant sustained acceleration in the business as we move into the slower summer [September] quarter (seasonally slowest Q)," Yee said.

Myriad may also need the planned direct-to-consumer in September to accelerate business, he added, but it wouldn't have an impact until November to December and earnings results wouldn't be until early 2010.

A few analysts, though, said they would remain buyers of Myriad, and use the current shares levels as an opportunity to increase their stake.

JPMorgan analyst Geoffrey Meacham - who maintained an overweight rating on the shares - said he doesn't believe the business model is broken, and growth should accelerate in the second half of fiscal 2010.

UBS analyst Derik de Bruin, meanwhile, reiterated his buy rating, though he noted shares will likely have high volatility ahead of Myriad's Aug.

25 quarter report.

"While this miss will fuel concerns about the company's growth potential, we continue to believe that MYGN's products have a significant market opportunity," Bruin said.

-By Shara Tibken, Dow Jones Newswires; 212-416-2189; [email protected]; (John Kell contributed to this report.)

http://online.wsj.com/article/BT-CO-20090701-709515.html
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