NEW YORK (AP) -- Shares of Myriad Genetics Inc. fell Thursday after a JPMorgan analyst downgraded the stock, saying it will face headwinds while investors wait for a Supreme Court ruling that could have a major impact on the company.
THE SPARK: Analyst Tycho Peterson lowered his rating to "Underweight" from "Neutral" and has a price target of $26 per share. He said Myriad's shares won't perform as well as its peers over the next few months while Wall Street waits for a decision in Association for Molecular Pathology v. Myriad Genetics, a case that challenges two human DNA patents held by Myriad.
Peterson said the Supreme Court appears to be interested in making a broad ruling about the patenting of genes rather than a decision specific to Myriad, and noted that in 2012 the court struck down other genetic patents. The analyst said he is not predicting that Myriad's patents will be overturned. However, he said the risks associated with the stock outweigh the potential rewards.
THE BIG PICTURE: In December, the Supreme Court said it will make a decision on a case involving two patents related to Myriad's BRACAnalysis test. The test detects genetic mutations linked to increased risks of breast and ovarian cancer. Myriad gets more than 80 percent of its revenue from the test, but even if the Supreme Court overturns its patents or rules that human genes cannot be patented, the company holds other patents supporting the test.
Those patents will expire in 2018, and Peterson said that means competing tests will reach the market eventually even if the Supreme Court upholds Myriad's patents.
SHARE ACTION: Myriad shares lost $1.38, or 5 percent, to $26.30 in afternoon trading. With Thursday's trading, the stock is down about 12 percent since Nov. 30, when the Supreme Court agreed to take up the BRACAnalysis patent case.