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Exact Sciences (EXAS) Gains From New Buyouts Amid High Costs

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Exact Sciences (EXAS - Free Report) continues to make significant progress with its Cologuard test. Yet, escalating expenses and competition are major downsides. The stock carries a Zacks Rank #3 (Hold).

Year to date, Exact Sciences has outperformed its industry. The stock has gained 57.6% against the industry's 5.3% decline.

Exact Sciences exited the first quarter of 2023 with better-than-expected results. The quarterly loss narrowed significantly from the year-ago period’s levels. Robust revenues from the Screening and Precision Oncology segments contributed to the first-quarter top line. During the quarter, 10,000 new healthcare professionals ordered Cologuard, bringing the total to over 312,000. The growing uptake of the company’s Oncotype DX Breast and therapy selection products are major advantages. The raised 2023 guidance is a major upside.

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. Notably, the Oncotype DX test directs approximately 70% of U.S. patients diagnosed with HR-positive HER2-negative breast cancer to the most effective treatment based on the risk of recurrence.

Per the first-quarter earnings update, the company recently ran the next-generation Cologuard on nearly 7,700 blinded DeeP-C samples. The second prospective study will provide valuable evidence supporting next-generation Cologuard's clinical value and competitively unique position. In multi-cancer early detection, it plans to share two additional sets of case-control data this year, validating the comprehensive multi-marker class approach.

The company is completing the final steps of its BLUE-C trial and expects to have top-line next-generation Cologuard data in mid-2023 following which it will file for FDA approval. The company plans to validate and make its tumor-informed molecular residual disease test available to colon cancer patients later this year.

On the flip side, in the first quarter of 2023, Exact Sciences registered a decline in COVID-19 sales, which hampered top-line growth. The company incurred an operating loss in the quarter under review, raising apprehension. A tough competitive landscape is an added concern.

Further, according to Exact Sciences, the Screening and Precision Oncology businesses were negatively impacted by the COVID-19 pandemic in Q1, although a large part has recovered. Further, pandemic-led cost inflation and supply-chain disruptions continue to impact the company’s operations, with the ongoing inflationary pressure leading to an increase in personnel-related costs.

In the first quarter of 2023, Exact Sciences’ general and administrative expenses rose 27.9%. Adjusted operating expenses were down 0.9% year over year. The escalating costs put significant pressure on the company’s bottom line.

Key Picks

Some better-ranked stocks in the overall healthcare sector are Penumbra (PEN - Free Report) , Lantheus (LNTH - Free Report) and Neuronetics (STIM - Free Report) . While Penumbra and Lantheus each sport a Zacks Rank #1 (Strong Buy), Neuronetics carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Penumbra’s stock has risen 120.5% in the past year. The Zacks Consensus Estimate for Penumbra’s earnings per share (EPS) has increased from $1.47 to $1.56 for 2023 and from $2.51 to $2.56 for 2024 in the past seven days.

PEN’s earnings beat estimates in each of the trailing four quarters, the average surprise being 109.42%. In the last reported quarter, the company registered an earnings surprise of 109.09%.

The Zacks Consensus Estimate for Lantheus’ 2023 EPS has increased from $4.95 to $5.60 in the past 30 days. Shares of the company have improved 54.8% in the past year against the industry’s 28% decline.

LNTH’s earnings beat estimates in each of the trailing four quarters, the average surprise being 25.77%. In the last reported quarter, the company recorded an earnings surprise of 13.95%.

Estimates for Neuronetics’ loss per share have narrowed from $1.32 to $1.29 for 2023 in the past seven days. Shares of the company have risen 10.4% in the past year compared with the industry’s 3.3% growth.

STIM’s earnings beat estimates in each of the trailing four quarters, the average surprise being 19.61%. In the last reported quarter, Neuronetics delivered an earnings surprise of 2.56%.

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