Myriad Genetics Upgraded to Neutral - Analyst Blog

We have upgraded Myriad Genetics (MYGN) to Neutral from Underperform based on the impressive performance of its molecular diagnostics business. Effective July 1, 2009, the company spun off its therapeutics business to focus on molecular diagnostics.
 
We believe that the de-risking strategy to separate the profitable predictive medicine business from the higher risk drug development business will create better value for shareholders. Each company will be able to pursue its long-term strategic initiatives, maximize its core technology strengths, seek new product opportunities, have a capital structure appropriate for its financial profile, and compete more effectively in its respective markets.
 
Sales of Myriad Genetics’ molecular diagnostic products continued to grow impressively in the first quarter of fiscal 2010. Sales came in at $85.1 million, versus $70.0 million for the same period in the prior year, reflecting a 21.6% increase. We remain optimistic about the predictive medicine market and believe it will keep recording double-digit growth in the coming years.
 
The impressive portfolio of molecular diagnostic products boasted by Myriad Genetics has also resulted in the stock being upgraded. Myriad Genetics currently has seven predictive medicine products on the market. Myriad's products are vital to the healthcare management of patients with cancer or a family history of cancer. They have the potential to be life savers and save healthcare costs.
 
Based on the above reasons, we have upgraded Myriad Genetics to Neutral with a price target of $25.50. Our target price is based on 16.8x our 2010 EPS estimate of $1.52.
Read the full analyst report on "MYGN"
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