Myriad Genetics, Inc. (NASDAQ: MYGN)’s downbeat earnings for F4Q2016 and guidance for the current quarter upset investors, sparking a selloff. But those are not the only reasons the stock is getting slapped by the market. The serious problem is in the company’s hereditary cancer testing (HCT) business.
HCT is the main business segment of Myriad Genetics, Inc. (NASDAQ: MYGN), accounting for almost 85% of total sales. In the just reported quarter, HCT sales fell 7%. The reason for the decline in HCT further raises more concerns about Myriad’s future.
What’s affecting HCT business?
Myriad is losing market share in the hereditary cancer diagnosis market and that is one reason it is struggling to make sales in its HCT business. On top of the market share loss, Myriad is also facing pricing pressure in its HCT business, thus limiting sales growth in the division.
Investors appear to believe that the problems Myriad is facing in its HCT segment could be tough to shake off quickly. As if that is the case, the company went ahead to provide dour outlook for the current quarter (F1Q2017) and fiscal year (F2017).
Myriad Genetics, Inc. (NASDAQ: MYGN) sees F1Q2017 revenue coming in the band of $168 to $170 million, with adjusted EPS coming in the band of $0.25 to $0.27. But analysts are looking for revenue of at least $192 million and EPS of at least $0.42.
As for F2017, the company is looking for revenue reading in the vicinity of $740 to $760 million, with adjusted EPS expected to come in the band of $1.00 to $1.10. But Wall Street has its sight focused on F2017 revenue of at least $791 million and EPS of $1.78.
What happened in F4Q for Myriad Genetics, Inc. (NASDAQ: MYGN)?
Over all, Myriad Genetics, Inc. (NASDAQ: MYGN) posted adjusted EPS of $0.36 in F4Q, down from $0.41 in the year ago quarter and below the consensus estimate of $0.37. Revenue of $186.5 million for the quarter slid 2% and missed the consensus estimate of $188 million.
What’s the reaction on Wall Street?
Several analysts have already downgraded their rating on Myriad Genetics, Inc. (NASDAQ: MYGN) following its disappointing F4Q and outlook for F2017.
Analysts at Barclays have downgraded Myriad to Equal Weight from Overweight and cut their price target on the stock by more than 50% to $24 from $50. The analysts at Piper Jaffary also took the cue, downgrading the stock to Neutral from Overweight and trimming their price target on it to $22 from $47.