Finance
Exact Sciences share prices higher due to return to growth of Cologuard
Exact Sciences (EXAS) the stock settled higher Thursday after beating second-quarter expectations, signaling a return to growth for its biggest moneymaker, a colon cancer test called Cologuard.
↑
X
CRSP Stock on Wild Ride After Historic FDA Approval. These gene editing treatments could be next.
Cologuard uses stool collected at home to screen patients with colorectal cancer. But Exact Sciences shares have been under pressure for months after a rare first-quarter revenue slowdown and a rival fall Health Guardian (GH) received approval from the Food and Drug Administration for its blood-based colon cancer screener, Shield.
The second-quarter report marked a complete turnaround for Exact Sciences, analysts said. Exact exceeded the upper limit of its revenue guidance and reconfirmed its full-year outlook. This suggests that Cologuard sales will accelerate again in the near term.
“In our view, investors should take a deep breath after Exact’s second-quarter update,” Canaccord Genuity analyst Kyle Mikson said in a report. “The company delivered solid year-over-year growth in Cologuard revenue and maintained its view that multiple factors should make year-over-year growth even stronger in the second half of 2024.”
In early trading on the current stock market, Exact Sciences shares rose 20.2% to 54.92. Stocks bounced off their 50-day moving average at the opening, Market wave shows.
Exact Sciences Stock: Beats Its Own Guide
Total revenue in the second quarter rose 12% to $699.3 million, above expectations of $690 million and Exact’s own forecast of $677 million to $697 million, according to FactSet.
That included $532 million from screening revenues and $168 million from the precision oncology business, up 15% and 7%, respectively. Screening revenues include Cologuard and PreventionGenetics. The latter offers tests that screen DNA for virtually all clinically relevant genes. Precision oncology includes the sale of breast cancer recurrence tests Oncotype DX and therapy selection tests.
Exact Sciences expects revenue of $2.81 billion to $2.85 billion for the year, up 13% at the midpoint. Screening revenue is expected to be between $2.16 billion and $2.18 billion.
“If the company can simply meet expectations, this would imply revenue growth of 21% in the second half, compared to 11% in the first half,” William Blair analyst Andrew Brackmann said in a report. “This should help expand the multiple, which has historically been driven by revenue growth.”
Brackmann maintained his outperform rating for the Exact Sciences share.
Exact’s blood-based test is coming
Exact Sciences is developing its own blood test for colon cancer.
The test is made possible by PCR (polymerase chain reaction), a technology that was widely used during the Covid pandemic. This should make it possible to have a much lower cost of goods than tests made using next-generation screening or NGS technology, Brackmann said.
This “allows the company to position its test at a lower (more appropriate) price point,” he said.
Evercore ISI analyst Vijay Kumar notes that the company expects its blood-based tests to perform similarly to other comparable blood-based tests.
“Management also emphasized that it expects to price the blood-based tests at a lower price, implying that the bar for competition will be very high,” he said.
Guardant’s Shield has a sensitivity of 83% for detecting colorectal cancer and a specificity of 90% for advanced neoplasia. Sensitivity is the ability of a test to correctly identify people with a disease. Specificity is the ability of the test to exclude people without disease. The Centers for Medicare and Medicaid Services reimburses for a test with an overall sensitivity of 74% and a specificity of 90%.
Kumar has an outperform rating for the Exact Sciences share. He says the stock is “set to bounce back if blood test results match Guardant Health’s performance.”
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
YOU MAY ALSO LIKE:
Moderna lowers its outlook on ‘very low’ European sales, despite quarterly results
Regeneron Stock Rises After Strong Second Quarter Performance
Looking for the next big scholarship winners? Start with these 3 steps
Find today’s top growth stocks to watch with IBD 50
Follow the premarket and after-the-open action with IBD experts
