UPDATE: Bank of America Downgrades Myriad Genetics as Competitive Concerns Emerge

In a report published on Friday, Bank of America analyst Derik de Bruin downgraded its rating on Myriad Genetics MYGN from Buy to Neutral. Bank of America also lowered its price target on the company from $37 to $35.

In the report, Bank of America commented that, "Yesterday, the Supreme Court of the United States (SCOTUS) issued a verdict on the “gene patent” case, invalidating certain MYGN patents on isolated DNA but maintaining that cDNA is patent-eligible. While many investors expected this outcome, within hours of the ruling, several labs, incl. Bio-Reference Labs (BRLI), Quest (DGX), and the Univ. of Washington / Ambry Genetics, announced that they will launch either BRCA gene breast cancer assays to compete with MYGN's BRACAnalysis test (~75% of sales) or multi-gene pan-cancer panels similar to MYGN's upcoming myRisk assay. This was a bit of a surprise to us given that some of the claims in MYGN's cDNA patent around primers were thought to be prohibitive. Near-term, we think that shares may recover some of the late day losses and that F4Q13 results should be strong. However, while we think MYGN still has a number of competitive advantages and have become more positive on the company's pipeline (eg, Prolaris), we believe that significant upside to shares may be limited until we see how the competitive landscape evolves over the next few months. As such, we downgrade MYGN shares from Buy to Neutral."

Myriad Genetics closed on Thursday at $32.01