Barclays Downgrades Myriad Genetics, Says HCT Share Losses Came Faster Than Expected

Barclays’ Jack Meehan express concern regarding the competitive weakness in Myriad Genetics, Inc.’s MYGN Hereditary Cancer Testing (HCT) business, expecting it to pressure the company’s overall results.

Meehan downgraded the rating on the company from Overweight to Equal Weight, while lowering the price target from $50 to $24.

The analyst noted that the company’s FY17 guidance was significantly below the estimates on both revenue and EPS.

Competitive Pressure

“While we continue to be positive on the new product strategy, the contribution does not appear to be big and fast enough to offset HCT pressure in the next year,” Meehan stated, while adding, “At this point, we view the thesis as much more balanced than our previous expectations.”

The analyst explained that the increasing competitive pressure for HCT was eroding the business faster than expected, even by the company, a quarter ago. This lowers the visibility into the longer term outlook for the business.

HCT Share Losses

In addition, Meehan stated that the “incremental market share loss is having a notable impact today on the business.”

The analyst also expressed concern regarding the turnover in the sales organization ahead of new oncology product launches over the next few years.

“We still view the new product strategy as compelling,” Meehan said, while adding, “We believe valuation does provide some floor for shares.”

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