On Tuesday, TD Cowen demonstrated a positive outlook for Exact Sciences Corp (NASDAQ:EXAS) by increasing the stock's price target from $82.00 to $86.00. The firm has sustained its Buy rating on the shares. The adjustment follows the Centers for Medicare & Medicaid Services' (CMS) recent release of final Clinical Laboratory Fee Schedule (CLFS) rates, which established a new pricing benchmark for the company's Cologuard Plus (CG+) test.
The final CLFS rates have set a price of approximately $591 for CG+, marking a significant 16% increase over the original Cologuard test's price. This development is a notable shift from the summer Medicare panel and preliminary findings, which had proposed no price increase for CG+ compared to Cologuard.
In light of this favorable pricing update, TD Cowen has revised its estimates for Exact Sciences' financials. The firm now predicts a 4% rise in revenue and a 10% increase in EBITDA for the year 2028. The analyst from TD Cowen noted that these projections are based on the assumption that CG+ will experience a 10% price increase, leaving potential for further upside.
The revised price target of $86 reflects TD Cowen's confidence in Exact Sciences' growth prospects, buoyed by the new CMS pricing for CG+. The analyst's statement highlighted the significant positive impact of the final CLFS rates on the company's valuation and future earnings potential.
In other recent news, Exact Sciences Corporation has seen major developments with a significant increase in the Medicare reimbursement rate for its Cologuard Plus test. The increase, set at 16% by the Centers for Medicare & Medicaid Services, was positively received by several analyst firms.
Piper Sandler maintained an Overweight rating, reaffirming a $75.00 price target, while Leerink Partners and Bernstein SocGen Group both sustained Outperform ratings with price targets of $70.00. Stifel also reiterated a Buy rating, setting a target of $67.00, and Wolfe Research held an Outperform rating at a $70.00 target.
Exact Sciences' Q3 2024 earnings revealed a 13% year-over-year revenue increase, reaching $709 million, and a substantial 75% increase in adjusted EBITDA to $99 million. The company has also reported progress in early cancer detection research, indicating a new multi-biomarker approach can significantly improve early cancer detection. These developments underline Exact Sciences' commitment to financial growth and advancements in cancer detection.
Exact Sciences anticipates a swift transition to the new rate for both Medicare fee-for-service and Medicare Advantage, which account for a substantial portion of Cologuard volumes. The company has revised its full-year revenue guidance to between $2.73 billion and $2.75 billion, with adjusted EBITDA expected to be between $310 million and $320 million. Despite operational challenges, Exact Sciences remains optimistic about accelerated growth for 2025 and a strong product pipeline.
InvestingPro Insights
While TD Cowen's optimistic outlook for Exact Sciences Corp (NASDAQ:EXAS) is encouraging, it's important to consider additional financial metrics and expert insights. According to InvestingPro data, Exact Sciences has a market capitalization of $10.21 billion and has shown revenue growth of 11.91% over the last twelve months. This aligns with the positive growth trajectory highlighted in the article.
However, InvestingPro Tips reveal some challenges. The company is not expected to be profitable this year, and it has not been profitable over the last twelve months. This information adds context to TD Cowen's focus on future growth potential rather than current profitability.
On a positive note, Exact Sciences' liquid assets exceed its short-term obligations, indicating a stable financial position that could support the company's growth initiatives, including the rollout of the higher-priced Cologuard Plus test.
For investors seeking a more comprehensive analysis, InvestingPro offers 6 additional tips for Exact Sciences. These insights could provide valuable context for evaluating the company's prospects alongside the recent CMS pricing update and TD Cowen's bullish stance.
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