Here's Why You Should Retain Exact Sciences (EXAS) Stock Now
Exact Sciences Corporation EXAS is likely to grow in the coming quarters, led by the broad-based momentum in Cologuard adoption. The company plans to transform cancer care by providing patients with valuable insights at every step of their diagnosis and treatment. A strong solvent balance sheet further buoys investors’ optimism.
Meanwhile, heavy dependence on the Cologuard test and operating in a highly competitive space are concerning for the company.
In the past year, this Zacks Rank #3 (Hold) stock has surged 109% against a 12.4% decline of the industry and a 21.5% rise of the S&P 500 composite.
The renowned global medical device company has a market capitalization of $11.65 billion. The company has an expected earnings growth rate of 41.1% for the next year compared to the industry’s 11.6%. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 25.12%.
Let’s delve deeper.
Key Drivers
Advancing New Solutions: Exact Sciences is planning several key milestones to bring six innovative cancer diagnostics from its pipeline to patients in need. In August 2023, the new data presented confirmed Exact Sciences' approach to multi-cancer early detection, real-world outcomes using the Oncotype DX Breast Recurrence Score and modeling comparisons between Cologuard and potential blood-based screening tests for colorectal cancer.
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Earlier in June, the company entered into a separate collaboration with two renowned healthcare organizations at the forefront of cancer research. The agreements aim to improve patient care by increasing access to genomic information.
Enhancing Customer Experience: Exact Sciences is currently working to build the best digital infrastructure and diagnostics. The company’s Precision Oncology portfolio guides treatment decisions for more than 200,000 cancer patients annually. A consistent focus on high-quality tests, top-tier clinical evidence and physician education cemented Oncotype DX as the standard of care.
Per the August Update, Exact Sciences’ management stated that its pipeline teams are focused on two of the most significant opportunities in cancer diagnostics, molecular residual disease and multi-cancer early detection. The company is working with Broad Institute to enhance and extend its molecular residual disease platform, Oncodetect. Further, EXAS announced the selection of its testing laboratory in Phoenix, AZ, for ComboMATCH clinical trials.
Favorable Solvency: Exact Sciences exited the second quarter of 2023 with cash and cash equivalents and marketable securities of $604.4 million, while the long-term debt was nil. This is good news, particularly during an overall tough macroeconomic scenario when the company faces a manufacturing and supply halt globally.
Downsides
Reliance on Cologuard Test: Exact Sciences’ financial results continue to be highly vulnerable to the performance of its leading Cologuard test. Per management, its ability to generate revenues will depend very substantially on the commercial success of its Cologuard and Oncotype DX breast cancer tests for at least the next 12 months. In case the company is unable to continue to grow sales of Cologuard and Oncotype DX breast cancer tests or if it is delayed or limited in doing so, EXAS’ business prospects, financial condition and results of operations will be adversely impacted.
A Tough Competitive Landscape: Given the large market for colorectal cancer screening, Exact Science faces numerous competitors, some of which possess significantly greater financial and other resources and development capabilities than the company.
Estimate Trend
In the past 30 days, the Zacks Consensus Estimate for Exact Sciences’ loss for 2023 has remained constant at $1.90 per share.
The Zacks Consensus Estimate for 2023 revenues is pegged at $2.46 billion, suggesting an 18.1% rise from the 2022 reported number.
Key Picks
Some better-ranked stocks in the broader medical space are Haemonetics HAE, Align Technology ALGN and Quanterix QTRX.
Haemonetics has an estimated earnings growth rate of 26.1% for fiscal 2024 compared with the industry’s 18.7%. HAE’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 19.39%. Its shares have rallied 23.5% against the industry’s 1.7% fall in the past year.
HAE carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Align Technology, carrying a Zacks Rank #2 at present, has a long-term estimated earnings growth rate of 17.5% compared with the industry’s 12.8%. Shares of the company have increased 37.7% compared with the industry’s 21.6% growth over the past year.
ALGN’s earnings surpassed estimates in three of the trailing four quarters and missed once. In the last reported quarter, it delivered an average earnings surprise of 9.9%.
Quanterix, carrying a Zacks Rank #2 at present, has an estimated earnings growth rate of 62.8% for the current year compared with the industry’s 15.2%. Shares of QTRX have surged 187.8% against the industry’s 1.7% decline over the past year.
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Align Technology, Inc. (ALGN) : Free Stock Analysis Report
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