The Myriad Genetics, Inc. (NASDAQ:MYGN) share price has fared very poorly over the last month, falling by a substantial 33%. Indeed, the recent drop has reduced its annual gain to a relatively sedate 5.7% over the last twelve months.

Following the heavy fall in price, Myriad Genetics may look like a strong buying opportunity at present with its price-to-sales (or "P/S") ratio of 2x, considering almost half of all companies in the Biotechs industry in the United States have P/S ratios greater than 12.6x and even P/S higher than 75x aren't out of the ordinary. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the highly reduced P/S.

How Myriad Genetics Has Been Performing

With revenue growth that's inferior to most other companies of late, Myriad Genetics has been relatively sluggish. It seems that many are expecting the uninspiring revenue performance to persist, which has repressed the growth of the P/S ratio. If you still like the company, you'd be hoping revenue doesn't get any worse and that you could pick up some stock while it's out of favour.

How Is Myriad Genetics' Revenue Growth Trending?

In order to justify its P/S ratio, Myriad Genetics would need to produce anemic growth that's substantially trailing the industry.

Taking a look back first, we see that the company managed to grow revenues by a handy 15% last year. Revenue has also lifted 21% in aggregate from three years ago, partly thanks to the last 12 months of growth. So we can start by confirming that the company has actually done a good job of growing revenue over that time.

Looking ahead now, revenue is anticipated to climb by 9.6% per year during the coming three years according to the analysts following the company. With the industry predicted to deliver 129% growth per year, the company is positioned for a weaker revenue result.

With this in consideration, its clear as to why Myriad Genetics' P/S is falling short industry peers. Apparently many shareholders weren't comfortable holding on while the company is potentially eyeing a less prosperous future.

What Does Myriad Genetics' P/S Mean For Investors?

Having almost fallen off a cliff, Myriad Genetics' share price has pulled its P/S way down as well. It's argued the price-to-sales ratio is an inferior measure of value within certain industries, but it can be a powerful business sentiment indicator.

We've established that Myriad Genetics maintains its low P/S on the weakness of its forecast growth being lower than the wider industry, as expected. Shareholders' pessimism on the revenue prospects for the company seems to be the main contributor to the depressed P/S. It's hard to see the share price rising strongly in the near future under these circumstances.

Before you take the next step, you should know about the 4 warning signs for Myriad Genetics that we have uncovered.

If you're unsure about the strength of Myriad Genetics' business, why not explore our interactive list of stocks with solid business fundamentals for some other companies you may have missed.

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