NEW YORK – Investment bank Craig-Hallum said Wednesday that it has initiated coverage of Myriad Genetics with a Buy rating on its stock and a price target of $29 per share.
Craig-Hallum analysts Bill Bonello and John Wilkin said in a note to investors that they expect revenues for Myriad's Prolaris prostate cancer assay will be relatively stable throughout the year and that the risk of payors dropping or restricting coverage of the firm's GeneSight pharmacogenomics test –– such as UnitedHealthcare did in January –– is low.
The analysts also noted that there appears to be significant growth opportunities in cancer testing for undiagnosed people considered to be high risk due to family history.
"This 'unaffected' market opportunity could be greater than $4.5 billion (or about three times bigger than the 'affected' market) with testing volumes growing in the high-single digits, and current penetration less than 10 percent," the analysts wrote, further noting that hereditary cancer testing represents nearly 45 percent of Myriad's revenue.
The analysts also said that they expect to see volume growth and increasing profitability in Myriad's prenatal testing business, driven by product introductions and possible guideline updates that could boost reimbursement.
Myriad recently issued revenue guidance for 2025 of between $840 million to $860 million, falling below the consensus of $876 million at that time. The Craig-Hallum analysts noted that this will likely cause financial estimates to be revised downwards.
"While we would normally be reluctant to recommend a stock where estimates need to come down," they wrote, "we think this situation is different given the fact that the company has already issued guidance."
The analysts acknowledged that Myriad is facing a number of significant near-term risks and headwinds, but these risks are "adequately reflected" in both the company's valuation and guidance.
"We believe that Myriad is well positioned for continued long-term growth and margin expansion," they concluded.
Shares of Myriad were up a fraction of a percent at $12.64 per share in morning trading on the Nasdaq.