On Thursday, Piper Sandler adjusted its outlook for Exact Sciences Corp (NASDAQ:EXAS), increasing the price target to $85 from the previous $75 while maintaining an Overweight rating on the company's shares. The firm's analyst highlighted the potential for significant operating leverage for Exact Sciences, particularly with the expected growth of its Cologuard product, which is a non-invasive screening test for colorectal cancer.
The analyst noted that the inclusion of Cologuard Plus, which is not yet factored into consensus numbers, could drive further growth and margin expansion for the company. Although expectations for the company's blood test to deliver breakthrough results are tempered, it is believed that even results comparable to Guardant Shield could provide a defensive opportunity. This would allow investors to view Exact Sciences with a more stable long-term value.
Exact Sciences is set to report the results of its algorithm study on Monday, and positive outcomes could shift investor attention back to the company's operating leverage. The analyst emphasized Exact Sciences as their top pick in the sector and reiterated the Overweight rating while updating the price target to reflect the new valuation.
The raised target by Piper Sandler comes as Exact Sciences continues to innovate in the field of cancer screening and diagnostics, with its products like Cologuard playing a significant role in non-invasive testing methods.
In other recent news, Exact Sciences Corporation has reported strong performance in its second quarter earnings, with revenues reaching $699 million, a 12% increase from the previous year. This growth was fueled by the use of its Cologuard test by over a million people and record global patient testing with Oncotype DX. The company also announced the commencement of its Falcon Registry study for Multi-Cancer Early Detection (MCED) at Baylor Scott & White Health in Texas, aiming to enroll up to 25,000 participants.
In addition to these developments, Exact Sciences is making significant strides in the development of new diagnostic tests, including the anticipated launch of Cologuard Plus and Oncodetect, and its blood-based colon cancer and multi-cancer screening tests. The company also announced a new license agreement with TwinStrand, which will strengthen its patent portfolio. Furthermore, the FDA has authorized a real-world evidence study for the multi-cancer screening test, which has detected 51% of cancers across 21 types.
Exact Sciences has also reaffirmed its full-year revenue guidance and raised its adjusted EBITDA outlook, signaling confidence in its continued growth trajectory. These are among the recent key developments for Exact Sciences Corporation. As part of these recent developments, the company is working towards final decisions from Medicare and the USPSTF, expected by year-end, with other paths also being pursued.
InvestingPro Insights
As Piper Sandler sets a higher price target for Exact Sciences Corp (NASDAQ:EXAS), real-time data and insights from InvestingPro add further context to the company's financial landscape. With a market capitalization of $11.85 billion, Exact Sciences is a significant player in the cancer screening and diagnostics field. Despite not being profitable in the last twelve months, the company has shown a strong return over the last three months, indicating a positive investor sentiment that aligns with Piper Sandler's outlook.
InvestingPro data reveals a notable revenue growth of 13.54% in the last twelve months as of Q2 2024, with a quarterly growth rate standing at 12.41%. This growth trajectory could support Piper Sandler's view of the potential for significant operating leverage. The gross profit margin remains high at 73.19%, which suggests that Exact Sciences has been effective in managing its cost of goods sold relative to its sales. However, the company's P/E ratio is currently negative at -67.91, reflecting the market's anticipation of future earnings rather than current profitability.
Among the InvestingPro Tips, the fact that Exact Sciences' liquid assets exceed its short-term obligations is a positive sign of the company's financial health and its ability to meet immediate liabilities. This could be a crucial factor for investors considering the long-term stability of the company. Additionally, while analysts do not expect the company to be profitable this year, the strong three-month return of 52.16% suggests that investor confidence may be buoyed by other factors, such as the potential growth of its Cologuard product and upcoming study results.
For investors seeking comprehensive analysis, InvestingPro offers additional tips on Exact Sciences, providing deeper insights into the company's financials and market performance. To explore these tips and gain a more detailed understanding of Exact Sciences' investment potential, visit https://www.investing.com/pro/EXAS.
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