Exact Sciences (EXAS) Up 4.2% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Exact Sciences (EXAS). Shares have added about 4.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Exact Sciences due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Exact Sciences Q4 Loss Narrows, Revenues Rise Y/Y
Exact Sciences reported a net loss of 27 cents per share for fourth-quarter 2023, a significant improvement from the year-ago loss of 72 cents per share as well as the Zacks Consensus Estimate of a loss of 53 cents.
Full-year net loss was $1.13 per share, narrower than the Zacks Consensus Estimate of a loss of $1.39. It also marked an improvement from a loss of $3.54 per share loss incurred in 2022.
Revenues in Detail
Fourth-quarter consolidated revenues were $646.9 million, up 17% (up 18% on a core revenue basis) year over year. The metric exceeded the Zacks Consensus Estimate by 2.4%.
Total revenues in 2023 were $2.49 billion, beating the Zacks Consensus Estimate by 0.8% and increasing 19.9% from 2022.
Segments in Detail
Screening revenues, including laboratory service revenues from Cologuard, PreventionGenetics and immaterial revenues from Biomatrica products, were $486.7 million. The figure increased 21% year over year.
The upside can be primarily attributed to broad-based momentum in Cologuard adoption by healthcare providers, with an all-time high of 172,000 providers ordering Cologuard during the fourth quarter.
Precision Oncology revenues, including laboratory service revenues from global Oncotype products and therapy selection products, were $160.2 million, up 12% year over year and 11% on a core basis. Growth was led by Oncotype DX, which expanded 48% internationally.
The company did not recognize any revenues from COVID-19 testing in the fourth quarter against $6.04 million in the year-ago period.
Margins
In the quarter under review, Exact Sciences’ gross profit (excluding the amortization of acquired intangibles) rose 17% to $475 million. The gross margin expanded 4 basis points (bps) to 73.4%.
Research and development expenses rose 21.9% year over year to $114.9 million. Sales and marketing expenses fell 9.4% to $190.5 million. General and administrative expenses rose 13.7% year over year to $220.6 million.
Adjusted operating expenses were $525.9 million in the fourth quarter, up 5.5% year over year. Adjusted operating loss totaled $50.9 million, narrower than the year-ago operating loss of $92.5 million.
Financial Update
Exact Sciences exited the fourth quarter of 2023 with cash and cash equivalents and marketable securities of $777.6 million compared with $632.1 million at the end of 2022.
The company had no long-term debt on its balance sheet at the end of the fourth quarter.
2024 View
The company has provided its 2024 revenue guidance.
Exact Sciences expects total revenues for the full year to be in the range of $2.81-$2.85 billion. The Zacks Consensus Estimate for the same is pegged at $2.82 billion.
For 2024, the company expects Screening revenues in the range of $2.155-$2.175 billion. The company expects Precision Oncology revenues in the range of $655-$675 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -21.32% due to these changes.
VGM Scores
At this time, Exact Sciences has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Exact Sciences has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Exact Sciences belongs to the Zacks Medical - Biomedical and Genetics industry. Another stock from the same industry, Illumina (ILMN), has gained 1.4% over the past month. More than a month has passed since the company reported results for the quarter ended December 2023.
Illumina reported revenues of $1.12 billion in the last reported quarter, representing a year-over-year change of +3.6%. EPS of $0.14 for the same period compares with $0.14 a year ago.
For the current quarter, Illumina is expected to post earnings of $0.03 per share, indicating a change of -62.5% from the year-ago quarter. The Zacks Consensus Estimate has changed -55.9% over the last 30 days.
Illumina has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.
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