NEW YORK (GenomeWeb) – Wells Fargo today upgraded shares of Myriad Genetics, saying its hereditary cancer testing business has stabilized after a period of market share loss.
In a research note, analyst Tim Evans upgraded Myriad to an Outperform rating from a prior Market Perform rating and raised the price range on the firm's stock to between $36 and $38 from a previous range of $33 to $34.
Following the decision by the US Supreme Court in June 2013 that human genes are not patentable, but synthetic DNA, or cDNA, is patent eligible, Myriad lost its stranglehold on the BRCA1/2 testing market as new players began offering similar tests. According to Evans, though, Myriad still has about a 90 percent share of the BRCA1/2 testing market and maintains a competitive advantage due to the quality of its database for classifying variants that contains more than 1 million test results.
Earlier this summer Mark Capone replaced Peter Meldrum who retired as president and CEO of Myriad. Evans noted the change in management, which also includes the hiring of Bryan Riggsbee last year as CFO, saying they "have a refreshed vision for value creation, and are likely to offer more transparency than the company has historically provided."
Myriad recently received a final local coverage determination from Medicare contractor Noridian for its Prolaris test for prostate cancer. While the firm anticipates $10 million to $12 million of revenues from the test this year, Evans said that the numbers could increase if Medicare decides to reimburse for the test's backlog. Further, Vectra DA revenues were up 12 percent sequentially during the fiscal fourth quarter, Myriad's most recently completed quarter, and Evan said that "better traction with new products in 2016 could improve sentiment around [Myriad's] recent diversification story."
Lastly, he also noted the company's companion diagnostics business, saying it gets "very little credit … We believe more clarity into this opportunity could offer upside potential for shares."
Shares of Myriad on the Nasdaq rose about 8 percent to $33.84 in afternoon trading.