On Thursday, Benchmark, a financial analysis firm, adjusted its price target for Exact Sciences (NASDAQ:EXAS) shares, a company specializing in cancer diagnostics and research. The new target is set at $67.00, decreased from the previous $91.00, while the firm maintains a Buy rating on the stock.
Exact Sciences reported second-quarter results that surpassed expectations and confirmed that its revenue outlook for the rest of 2024 remains steady.
The company's Cologuard product, a non-invasive colon cancer screening test, is anticipated to continue its growth trajectory. This is attributed to an increase in electronic ordering and health system partnerships that encourage patient adherence to colon cancer screening guidelines.
These factors are particularly significant in light of the Centers for Medicare & Medicaid Services (CMS) conducting focus audits on Medicare Advantage plans, in addition to regular audits.
The company's Precision Oncology segment also shows promise with the international launch of the Oncotype DX test in Japan, which has contributed to a 7% year-over-year growth.
Looking ahead, Exact Sciences is developing new products that are expected to be key revenue drivers in 2025 and beyond. These include enhanced screening tests like Cologuard Plus and a blood-based test, as well as tools for cancer therapy selection and detection of molecular residual disease in solid tumors.
Benchmark cites market conditions and colonoscopy capacity constraints as potential contributors to strong performance for Cologuard in the second half of 2024.
Despite the optimistic outlook, the reduction in the price target to $67 from $91 is a result of a broader compression in market multiples, leading Benchmark to apply a lower multiple of 5.0x to the company's projected 2025 revenue, down from 6.5x. The firm reiterates its confidence in the stock with a continued Buy rating.
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