Why Myriad Shares Sank Again

While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a closer look at particularly stock-shaking upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of Myriad Genetics (NASDAQ: MYGN  ) slipped 4% this morning after Credit Suisse downgraded the molecular diagnostic company from "neutral" to "underperform."

So what: Along with the downgrade, analyst Vamil Divan lowered his price target to $20 (from $28), representing about 20% worth of downside to Friday's close. While value investors might be attracted to Myriad's steady share price decline in recent months, Divan believes that there's plenty of room to fall given all the uncertainty that continues to surround its Integrated BRACAnalysis test.

Now what: Credit Suisse lowered its EPS and sales outlook for 2014 and beyond.

"Our review of the legal, scientific and pricing issues surrounding MYGN's Integrated BRACAnalysis test leaves us increasingly concerned about the company's growth prospects," noted Credit Suisse. "We believe it is unlikely that MYGN will be able to secure a preliminary injunction (PI) removing potential competitors from the market in the coming weeks and, as a result, we see MYGN losing market share and pricing power as we move into 2014 and beyond."

With Myriad shares off about 40% from its 52-week highs and trading at a forward P/E of 11, however, it's hard to believe that those risks aren't already somewhat baked into the valuation. 

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