Exact Sciences Corporation ( EXAS Quick Quote EXAS - Free Report) is well poised for growth in coming quarters, led by the continued strength across the Screening and Precision Oncology businesses. The raised 2023 guidance is a major upside. However, mounting expenses and stiff competition do not bode well.
In the past year, this Zacks Rank #3 (Hold) stock has surged 72.2% against a 5.4% decline of the
industry and a 6% rise of the S&P 500 composite.
The renowned global medical device company has a market capitalization of $15.38 billion. The company’s next-year expected growth rate of 28.7% compares favorably with the industry’s growth projection of 9.6%.
Let’s delve deeper.
Key Drivers Q1 Upsides: 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. Advancing New Solutions: With regard to the third priority of advancing new solutions, Exact Sciences is planning several key milestones to bring six innovative cancer diagnostics from its pipeline to patients in need.
In February 2023, Exact Sciences launched OncoExTra therapy selection test in the United States. OncoExTra is a next-generation sequencing (NGS), comprehensive DNA and RNA-based genomic test providing doctors and their patients a complete molecular picture of the patient's cancer. The test provides reliable and actionable results personalized to each patient.
During the November 2022 update, the company noted that it launched an innovative Cologuard collection kit to give patients more time to get their samples back to the lab. The kit displayed the power of the multi-cancer early detection approach at the European Society for Medical Oncology Congress and making hereditary cancer test Riskguard available to oncologists through an early access program.
Raised Guidance: The company raised its 2023 revenue guidance to the range of $2.380-$2.420 billion (from the earlier guidance of $2.265-$2.315 billion). The Zacks Consensus Estimate for the same is pegged at $2.26 billion.
For 2023, the company expects its Screening revenues in the range of $1.770-$1.795 billion ($1.660-$1.690 billion). The company expects Precision Oncology revenues in the range of $605-$620 million ($600-$620 million). COVID-19 testing revenues are expected to be $5 million (unchanged).
Downsides Escalating Costs: Exact Science adopted several strategies to improve its revenue performance. These include portfolio expansion and penetration in the international arena. So far, this has escalated costs and operating expenses for the company. Image Source: Zacks Investment Research
In the first quarter of 2023, Exact Sciences’ General and administrative expenses rose 27.9%. Adjusted operating expenses dropped 0.9% year over year. The escalating costs are exerting significant 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 Trend
In the past 60 days, the Zacks Consensus Estimate for Exact Sciences’ loss for 2023 has moved 25% north to $2.16.
The Zacks Consensus Estimate for 2023 revenues is pegged at $2.41 billion, suggesting a 15.5% rise from the 2022 reported number.
Some better-ranked stocks in the broader medical space are
Addus Homecare Corporation ( ADUS Quick Quote ADUS - Free Report) , Merit Medical Systems, Inc. ( MMSI Quick Quote MMSI - Free Report) and Hologic, Inc. ( HOLX Quick Quote HOLX - Free Report) .
The Zacks Consensus Estimate for Addus Homecare’s 2023 earnings indicates 10.9% year-over-year growth. The Zacks Consensus Estimate for ADUS’s 2023 earnings has moved 0.5% north in the past 30 days.
Addus Homecare has a long-term estimated growth rate of 11.8%. You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Merit Medical reported a first-quarter 2023 adjusted EPS of 64 cents, beating the Zacks Consensus Estimate by 16.4%. Revenues of $297.6 million surpassed the Zacks Consensus Estimate by 5.9%. It currently carries a Zacks Rank #2.
Merit Medical has a long-term estimated growth rate of 11%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 20.2%.
Hologic, carrying a Zacks Rank #2 (Buy) at present, has an estimated growth rate of 5.1% for fiscal 2024. HOLX’s earnings surpassed estimates in all the trailing four quarters, the average being 27.3%.
Hologic has gained 4.5% compared with the industry’s 2.6% rise in the past year.