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Exact Sciences (EXAS) Gains From New Buyouts Amid Rising Costs

Exact Sciences EXAS continues to make significant progress with its Cologuard test. Yet, escalating expenses and competition are major downsides. The stock carries a Zacks Rank #3 (Hold) at present.

The Exact Sciences team is currently focusing on its three strategic priorities — getting more people tested; enhancing customer experience; and advancing the pipeline of blood-based cancer diagnostic tests. In terms of the first priority, the company is confident about capturing at least 40% of the U.S. colorectal cancer screening market banking on strong sales teams, partnership with Pfizer, innovative marketing campaign and deep-payer relationships providing a powerful commercial organization to support Cologuard's growth.

The company is currently focusing on three areas to enhance Cologuard growth. Building the best and most effective commercial organization in healthcare by investing in the leadership team, training and sales force effectiveness is the first strategy. The second process includes improving the customer experience by making it simpler to order Cologuard electronically and continue rescreening patients every three years. The third strategy includes screening more people starting at age 45 to catch cancer earlier. In terms of the latest development, more than 9,000 new healthcare professionals ordered Cologuard during the second quarter and more than 321,000 have ordered since launch. About 75% of all U.S. primary care physicians have ordered Cologuard.

Exact Sciences Corporation Price

Exact Sciences Corporation Price
Exact Sciences Corporation Price

Exact Sciences Corporation price | Exact Sciences Corporation Quote

Following the acquisitions of Paradigm and Ashion, EXAS is now offering therapy selection tests for patients with advanced cancer, providing even more value to oncologists, researchers and pharma partners. In terms of the latest development, Exact Sciences secured reimbursement for the Oncotype DX Breast test in Japan, where 90,000 women are diagnosed with breast cancer every year. About half of them are eligible for Oncotype DX, making Japan the most significant opportunity outside the United States.

Over the past year, the stock has risen 66% against a 13.2% decline of the industry.

On the flip side, according to Exact Sciences, the Screening and Precision Oncology businesses have been negatively impacted by the ongoing COVID-19 pandemic, although a large part of it has recovered. The company expects any future outbreaks of COVID-19 and the emergence of new variants to diminish access to healthcare provider offices. Further, pandemic-led cost inflation and supply-chain disruptions continue to impact the company’s operations, with the ongoing inflationary pressure leading to an increase in personnel-related costs.

During the second quarter, COVID testing revenues decreased 84% to $2 million. Going by our model, we expect EXAS COVID testing revenues to decline by 89.2% in 2023.

Exact Sciences has been grappling with escalated expenses for a while. Although the company is gradually coming out of the impact of the two-and-a-half-year-long healthcare crisis, deteriorating international trade with global inflationary pressure leading to a tough situation related to raw material and labor costs as well as freight charges and rising interest rates are putting the medical device space in a tight spot. All these are creating significant pressure on the company’s profitability.

The company has also adopted several strategies to improve its revenue performance. These include portfolio expansion and penetration in the international arena. So far, this has escalated costs and operating expenses for the company.

Key Picks

Some better-ranked stocks in the broader medical space are Haemonetics HAE, Quanterix QTRX and SiBone SIBN.

Haemonetics’ stock has risen 19.9% in the past year. Earnings estimates for Haemonetics have increased from $3.56 to $3.74 in 2023 and $3.96 to $4.07 in 2024 in the past 30 days. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

HAE’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 19.39%. In the last reported quarter, it delivered an earnings surprise of 38.16%.

Estimates for Quanterix’s 2023 loss per share have narrowed from $1.19 to 97 cents in the past 30 days. Shares of the company have soared 167.5% in the past year against the industry’s decline of 1.7%. It currently carries a Zacks Rank #2 (Buy).

QTRX’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 30.39%. In the last reported quarter, it posted an earnings surprise of 55.56%.

Estimates for SiBone’s 2023 loss have narrowed from $1.42 to $1.27 per share in the past 30 days. Shares of the company have gained 31% in the past year compared with the industry’s rise of 1.9%. It currently carries a Zacks Rank #2.

SIBN’s earnings beat estimates in all the trailing four quarters, the average surprise being 20.37%. In the last reported quarter, SiBone delivered an earnings surprise of 26.83%.

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