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Here's Why You Should Hold on to Exact Sciences (EXAS) Stock
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Exact Sciences Corporation (EXAS - Free Report) is well poised for growth, backed by strong growth in Precision Oncology, driven by Oncotype DX Breast volumes. Further, the company’s legacy Screening business is witnessing significant improvement buoyed by Cologuard volume growth. However, escalating costs and stiff competition are concerning.
Year-to-date, shares of this Zacks Rank #3 (Hold) company have lost 8.3% compared with the industry’s 11.2% fall. The S&P 500 fell 2.6% during the same period.
The molecular diagnostics company focused on the early detection and prevention of some of the deadliest forms of cancer has a market capitalization of $12.42 billion. The company projects 25.2% growth for the next year.
Riding on the company’s current business growth and bullish near-term prospects, this stock is worth holding on to for now.
Key Growth Catalysts
Growth in Precision Oncology: Following the acquisitions of Paradigm and Ashion, Exact Sciences is now offering therapy selection tests for patients with advanced cancer, providing even more value to oncologists, researchers and pharma partners. The Oncotype DX Breast test is witnessing greater market adoption by helping in the diagnosis of 1.3 million women with early-stage breast cancer, supported by the publication of the RxPONDER study in the New England Journal of Medicine and adding a new test to support comprehensive tumor profiling for advanced cancer, oncomap ExTra.
Cologuard Enhancement: The company is currently focusing on three areas to enhance Cologuard growth. The first strategy is to build the best and most effective commercial organization in healthcare by investing in the leadership team, training, and sales force effectiveness. The second strategy is to improve the customer experience by making it simpler to order Cologuard electronically and continue rescreening patients every three years; and the third strategy is to screen more people starting at age 45 to catch cancer earlier. During the fourth-quarter earnings update, the company noted that it has achieved more than $100 million in revenues from patients being rescreened with Cologuard, more than $40 million from patients in the 45 to 49 age group and a 10-point improvement in the electronic ordering rate to 50%.
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Advancing New Solutions: In January 2022, Exact Sciences acquired PreventionGenetics -- a genetic testing laboratory, to complement its advanced cancer diagnostics portfolio and support its entrance into hereditary cancer testing (HCT). PreventionGenetics' comprehensive genetic testing portfolio complements Exact Sciences' advanced cancer tests, enabling disease prevention and earlier cancer detection to benefit patients across decades of life. In the same month, Exact Sciences and OncXerna Therapeutics entered into an exclusive license agreement to bring OncXerna's Xerna TME Panel lab services to more patients in the United States.
Downsides
Escalating Costs: In the fourth quarter, sales and marketing expenses increased 70.4%, while general and administrative expenses surged 23.6% year over year. Gross margin contracted 373 basis points (bps) to 74.9%. These escalating costs are building pressure on the company’s bottom line.
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 Trends
Exact Sciences is witnessing a constant estimate revision trend for the current year. In the past 30 days, the Zacks Consensus Estimate for its bottom line has been constant at a loss of $4.33.
The Zacks Consensus Estimate for its first-quarter 2022 revenues is pegged at $461.9 million, suggesting 14.9% growth from the year-ago reported number.
Key Picks
Some better-ranked stocks in the broader medical space are McKesson Corporation (MCK - Free Report) , AMN Healthcare Services, Inc. (AMN - Free Report) and Bio-Rad Laboratories, Inc. (BIO - Free Report) .
McKesson has a long-term earnings growth rate of 11.8%. MCK has gained 49.7% compared with the industry’s 4.7% growth in the past year.
AMN Healthcare, flaunting a Zacks Rank #1, has a long-term earnings growth rate of 16.2%. The company surpassed earnings estimates in the trailing four quarters, delivering a surprise of 19.5%, on average.
AMN Healthcare has outperformed its industry in the past year. AMN has gained 23.8% versus the 62% industry decline.
Bio-Rad reported fourth-quarter 2021 adjusted EPS of $3.21, which surpassed the Zacks Consensus Estimate by 11.9%. It currently has a Zacks Rank #2.
Bio-Rad has an earnings yield of 2.3% versus the industry’s negative yield. BIO surpassed earnings estimates in the trailing four quarters, the average surprise being 66.9%.
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Here's Why You Should Hold on to Exact Sciences (EXAS) Stock
Exact Sciences Corporation (EXAS - Free Report) is well poised for growth, backed by strong growth in Precision Oncology, driven by Oncotype DX Breast volumes. Further, the company’s legacy Screening business is witnessing significant improvement buoyed by Cologuard volume growth. However, escalating costs and stiff competition are concerning.
Year-to-date, shares of this Zacks Rank #3 (Hold) company have lost 8.3% compared with the industry’s 11.2% fall. The S&P 500 fell 2.6% during the same period.
The molecular diagnostics company focused on the early detection and prevention of some of the deadliest forms of cancer has a market capitalization of $12.42 billion. The company projects 25.2% growth for the next year.
Riding on the company’s current business growth and bullish near-term prospects, this stock is worth holding on to for now.
Key Growth Catalysts
Growth in Precision Oncology: Following the acquisitions of Paradigm and Ashion, Exact Sciences is now offering therapy selection tests for patients with advanced cancer, providing even more value to oncologists, researchers and pharma partners. The Oncotype DX Breast test is witnessing greater market adoption by helping in the diagnosis of 1.3 million women with early-stage breast cancer, supported by the publication of the RxPONDER study in the New England Journal of Medicine and adding a new test to support comprehensive tumor profiling for advanced cancer, oncomap ExTra.
Cologuard Enhancement: The company is currently focusing on three areas to enhance Cologuard growth. The first strategy is to build the best and most effective commercial organization in healthcare by investing in the leadership team, training, and sales force effectiveness. The second strategy is to improve the customer experience by making it simpler to order Cologuard electronically and continue rescreening patients every three years; and the third strategy is to screen more people starting at age 45 to catch cancer earlier. During the fourth-quarter earnings update, the company noted that it has achieved more than $100 million in revenues from patients being rescreened with Cologuard, more than $40 million from patients in the 45 to 49 age group and a 10-point improvement in the electronic ordering rate to 50%.
Advancing New Solutions: In January 2022, Exact Sciences acquired PreventionGenetics -- a genetic testing laboratory, to complement its advanced cancer diagnostics portfolio and support its entrance into hereditary cancer testing (HCT). PreventionGenetics' comprehensive genetic testing portfolio complements Exact Sciences' advanced cancer tests, enabling disease prevention and earlier cancer detection to benefit patients across decades of life. In the same month, Exact Sciences and OncXerna Therapeutics entered into an exclusive license agreement to bring OncXerna's Xerna TME Panel lab services to more patients in the United States.
Downsides
Escalating Costs: In the fourth quarter, sales and marketing expenses increased 70.4%, while general and administrative expenses surged 23.6% year over year. Gross margin contracted 373 basis points (bps) to 74.9%. These escalating costs are building pressure on the company’s bottom line.
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 Trends
Exact Sciences is witnessing a constant estimate revision trend for the current year. In the past 30 days, the Zacks Consensus Estimate for its bottom line has been constant at a loss of $4.33.
The Zacks Consensus Estimate for its first-quarter 2022 revenues is pegged at $461.9 million, suggesting 14.9% growth from the year-ago reported number.
Key Picks
Some better-ranked stocks in the broader medical space are McKesson Corporation (MCK - Free Report) , AMN Healthcare Services, Inc. (AMN - Free Report) and Bio-Rad Laboratories, Inc. (BIO - Free Report) .
McKesson, carrying a Zacks Rank #2 (Buy), reported third-quarter fiscal 2022 adjusted earnings per share (EPS) of $6.15, which beat the Zacks Consensus Estimate of $5.38 by 14.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
McKesson has a long-term earnings growth rate of 11.8%. MCK has gained 49.7% compared with the industry’s 4.7% growth in the past year.
AMN Healthcare, flaunting a Zacks Rank #1, has a long-term earnings growth rate of 16.2%. The company surpassed earnings estimates in the trailing four quarters, delivering a surprise of 19.5%, on average.
AMN Healthcare has outperformed its industry in the past year. AMN has gained 23.8% versus the 62% industry decline.
Bio-Rad reported fourth-quarter 2021 adjusted EPS of $3.21, which surpassed the Zacks Consensus Estimate by 11.9%. It currently has a Zacks Rank #2.
Bio-Rad has an earnings yield of 2.3% versus the industry’s negative yield. BIO surpassed earnings estimates in the trailing four quarters, the average surprise being 66.9%.