Exact Sciences (EXAS) Stock Has 40% Upside From Here, Says Analyst


Exact Sciences Corporation’s (EXAS) preliminary quarterly results blew expectations out of the water.

Yesterday, the molecular diagnostics company released preliminary results for its fourth quarter that exceeded analysts’ estimates. Total revenue for the quarter is expected to land between $294 million and $296 million, reflecting a top-line beat of about $4 million to $6 million.

The better-than-expected outcome was primarily driven by its acquisition of Genomic Health, which was finalized back in November and gave it access to Oncotype DX gene expression tests that have been used in treatment decisions for over 1 million cancer patients globally. During the quarter, Oncotype DX test volume growth of 14%, or total test volume of 41,000, helped Genomic Health generate revenue of between $118 and $119 million, up 13% year-over-year.

On top of this, Cologuard, its FDA approved noninvasive, at-home colon cancer screening test, will most likely see revenue come in within the range of $229 million to $230 million. While this falls in line with the consensus estimate, BTIG analyst Amanda Murphy reminds investors that the difference between consensus and guidance is the highest it has been this year. She points out that “consensus for Cologuard revenue was at the high-end of management’s guidance range for the quarter.” If achieved, the figure would also represent a year-over-year increase of 61%.

Based on the expected Cologuard revenue, it isn’t surprising to the analyst, then, that volumes for the screening test are also expected to match the estimate. The results indicate Cologuard test volume of 477,000 could be in store. This, however, would not only come in above management’s guidance of between 465,000 to 475,000, but also reflect impressive growth of 63%.

While management isn’t offering any 2020 guidance before its earnings call in February, Murphy notes that the results reaffirm her already established bullish thesis. “Since Cologuard was approved in 2014, Exact has secured broad reimbursement coverage, developed a large and experienced sales force, increased its lab capacity to seven million tests per year, and made significant investments in IT infrastructure. We believe Cologuard is currently at an inflection point and expect the company to hit its long-term goal of 40% market penetration by the end of 2030,” she explained. The four-star analyst added, “While not explicitly included in our current valuation model, we are also optimistic around the potential for Exact’s liquid biopsy test for liver cancer.”

Bearing this in mind, Murphy maintained both a Buy rating as well as a $127 price target. This conveys her confidence in Exact’s ability to climb 40% higher in the next twelve months. (To watch Murphy’s track record, click here)

As for the rest of the Street? It turns out that other analysts wholeheartedly agree with the BTIG analyst. Out of 9 total analysts that have published a recommendation over the last three months, 100% see the stock as a Buy. This makes the consensus rating a unanimous Strong Buy. Not to mention the $123.56 average price target puts the upside potential just below Murphy’s forecast at 37%. (See Exact Sciences stock analysis on TipRanks)

 

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