Transenterix Inc (TRXC) Earns a Price Target Jump, EXACT Sciences Corporation (EXAS) Business Poised to Take Off Within 3 Years

Rick Wise: High surgeon intrigue in TRXC's Senhance; Mark Massaro: EXAS could hit 2.7M in tests by 2021.


Transenterix Draws Enticing Surgeon Interest 

Transenterix Inc (NYSEAMERICAN:TRXC) investors are joining in Stifel analyst Rick Wise‘s surging confidence on the small-cap robotic-surgery player on back of days just spent at the surgery-focused medical meeting, the 2017 American College of Surgeons (ACS) conference. In reaction to Wise’s increasingly bullish expectations, investors already sent shares on a 21% climb just yesterday, with Transenterix stock continuing to buzz up 4% today.

In the first key medical meeting following the approval of the company’s Senhance Robot, designed to assist doctors perform surgery, it is clear to Wise that surgeons like what they see from the surgical robot maker.

Commending “encouraging due-diligence” from this biotech company, the analyst reiterates a Buy rating on TRXC while bumping up the price target from $3.75 to $4.00, which represents an almost 34% increase from where the stock is currently trading. (To watch Wise’s track record, click here)

Wise highlights, “At the meeting, we spoke with a number of key opinion leading surgeons and had the opportunity to gauge early surgeon reactions to the Senhance robotic surgical system. We highlight three major takeaways: (1) surgeon interest in Senhance is clearly high; (2) surgeons appeared to react positively to Senhance’s differentiated feature set/attractive economics; and (3) those reactions augur well for Senhance adoption, utilization, and our 2018 and beyond revenue projections. In sum, we left ACS sensing that the company is making an encouraging start in the US and that EU commercial progress should start be more visible in 2018.”

Domestic approval kicks off the start of what will be a U.S. commercial “journey” spanning many years, continues the analyst, who believes that in both OB/GYN (obsectrics and gynaecology) as well as in colorecotral indications, there is an expanding “robotic presence” that awaits a mostly uncharted 1.6 million yearly domestic procedure opportunity ahead. In other words, this prospect translates to what could be a whopping $10 billion market dollar opportunity in the coming years.

All the same, it remains in the “early days” of Senhance’s commercial potential spanning the globe. “And recall that, not only is TRXC selling a potentially disruptive new technology platform, but one that also costs $1M+. As a result, we believe it will take well into 2018 to see the all of Senhance’s differentiated functionality and attractive economic model to translate to visible system sales and revenues,” surmises White, who looks forward with positive anticipation towards this advancing biotech company’s future.

Wall Street very much likes what it sees with this maker of surgical robots, considering TipRanks analytics demonstrate TRXC as a Strong Buy. Based on 4 analysts polled by TipRanks in the last 3 months, 3 rate a Buy on Transenterix stock while 1 maintains a Hold. The 12-month average price target stands at $4.50, marking a 50% upside from where the stock is currently trading.

Exact Sciences’ Gains Continue to Soar

EXACT Sciences Corporation (NASDAQ:EXAS) shares are on a nearly 12% upturn after releasing standout third quarter earnings yesterday, marking the biotech firm’s third win in a row in terms of outperformance throughout 2017. As the company’s key colorectal cancer screening test Cologuard saw a 158% year-over-year growth to earn Exact Sciences $72.6 million in revenue, trouncing expectations, one compelling aspect remains quite clear: the biotech player’s growth orbit continues to be out of this world.

Canaccord analyst Mark Massaro sings the praises of what is another stellar quarterly triumph for the company, reiterating a Buy rating on EXAS stock with a price target of $60, which implies a 7% increase from where the stock is currently trading. (To watch Massaro’s track record, click here)

Consider that Exact Sciences’ revenue of almost $73 million far surpassed the analyst’s expectations of $59.2 million as well as the Street’s $65.0 million. Likewise, for the third quarter, the firm yielded 161,000 in volumes, denoting a 136% year-over-year climb, shooting past the analyst’s forecast looking for 147,000, with the analyst noting barely any hurricane-correlated impact here. Moreover, the firm’s $80.3 million in operating expenses outclassed the analyst’s $74.0 million, as Massaro notes there was a boost in G&A-centric investments in both IT as well as personnel this quarter. Keeping in the theme of beats across the board, patient compliance of 66% burst past the analyst’s $64%. Third quarter gross margins hit a record-high 71%, rocketing past the analyst’s 62.8% estimate. Even the firm’s revenue per test of $451 soared past Massaro’s projection of $403.  EXAS closed its quarter with $462 million in cash, with Cologuard now covered by 239 million lives, another rise compared to the second quarter’s 235 million.

In an enthusiastic overview, the analyst offers some context: “EXAS is 3-for-3 this year beating-and-raising as they continue to demonstrate outstanding growth. The magnitude of the revenue beat, strength in GM and the narrowing of operating losses were the biggest surprises for us. Bigger picture, management raised its LT outlook to capture 40% of the colon cancer screening market, up from 30% previously. EXAS also provided plans to increase its lab capacity […] to meet its growing demand.”

For 2017, Exact Sciences once more generates high conviction in its success, as the management team boosts its revenue outlook for the year from a range of $230 to $240 million up to $254 to $257 million and volume guidance from 550,000 tests up to 568,000 to 572,000 tests. For the fourth quarter, whereas the analyst once predicted roughly 165,000 in volume, the firm realized a quarterly rise to 173,000 to 177,000, which Massaro finds “achievable given sequential growth rates this year of +22%, +35% and +19% in the first 3 quarters.”

Ultimately, “EXAS has a dedicated team in place to focus on Cologuard reordering for the first patients that ordered ~3 years ago. We largely maintain our estimates of what we believe is conservative Cologuard reordering levels into our model, starting in Q1/18, and while we expect a small impact to EXAS in 2018 or 2019, we believe the acceleration to EXAS’ business will be explosive in ’20 and ’21,” Massaro contends, anticipating a launch could be a reality as a laboratory developed test (LDT) by the close of next year, even though the firm might opt to submit to the FDA- or “both.”

How does Massaro’s confident singing praises measure up against the word of the Street? Quite on pitch, it seems, as TipRanks analytics exhibit EXAS as a Strong Buy. Out of 7 analysts polled by TipRanks, in the last 3 months, all 7 are bullish on Exact Sciences stock. With a return potential of nearly 4%, the stock’s consensus target price stands at $57.57.

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