Genomic Health's Cost Pressure Mounts, Cancer Tests Strong

On Oct 4, we issued an updated research report on Genomic Health Inc GHDX, a global cancer research company with focus on advanced molecular diagnostics.

Over the past three months, shares of the company have been trading below the broader industry. The stock has declined 2.8% in contrast to the broader industry’s 7.5% gain.

This Redwood City, CA-based company’s sole reliance on profitability of Breast Oncotype DX test remains a concern. Plus, rising operating expenses continue to be another major headwind creating bottom-line pressure.

Genomic Health, Inc. Price and Consensus

Genomic Health, Inc. Price and Consensus | Genomic Health, Inc. Quote

Above all, management’s decision against issue of any guidance has been discouraging, thus in turn failing to provide clear-cut visibility about the company’s upcoming performance.

On a positive note, Genomic Health continues to experience strong growth in breast cancer scores. Of late, the company has witnessed rise in invasive breast cancer revenues. It has seen growth in the global breast cancer business in the recently reported second quarter as well.

The company also recently announced expanded Medicare coverage of the Oncotype DX Genomic Prostate Score test. In fact, it continues to be the market leader in low-risk and intermediate-risk prostate cancer on the back of test volume performance for the last several quarters. The company is currently focusing on partnership with Epic Sciences to launch Oncotype DX AR-V7 for prostate cancer by the end of 2017.

Additionally, the company’s colon cancer test helped it attain a global identity with more than 26,060 Oncotype DX test (in three major cancer types namely, breast, colon and prostate) results. Having established a strong foothold in the United States, Genomic Health is now making considerable expansion in the international arena.

Zacks Rank & Key Picks

Genomic Health currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the medical sector are Orthofix International N.V. OFIX, Luminex Corporation LMNX and IDEXX Laboratories, Inc. IDXX. Orthofix International and Luminex Corporation sport a Zacks Rank #1 (Strong Buy), while IDEXX Laboratories carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Orthofix International has a long-term expected earnings growth rate of 11.8%. The stock has surged roughly 39.1% over the last six months.

Luminex Corporation has a long-term expected earnings growth rate of 16.3%. The stock has rallied 14.1% over the last six months.

IDEXX Laboratories has a long-term expected earnings growth rate of 19.8%. The stock has climbed 39.2% over a year’s time.

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