Genomic Health’s (GHDX) first quarter 2010 loss of $0.07 per share missed the Zacks Consensus Estimate of a loss of $0.03. Although the company’s lead product, Oncotype DX breast cancer test, recorded a year-over-year growth of 20%, revenues declined sequentially.
Meanwhile, Genomic launched its colon cancer test in January 2010, though this test will take a fair amount of time before contributing significantly to the top line. As a result, the company is solely dependent on the breast cancer test. Moreover, we are concerned about the outcome of the FDA meeting on LDTs, the outcome of which might have a long-term impact on the company.
Other pipeline tests at Genomic have a long way to go before commercialization, as well. Given these factors, we downgrade the stock to Underperform. We have also lowered our estimates for the second quarter 2010 and fiscal 2011.