On Tuesday, Canaccord Genuity maintained its Buy rating on Exact Sciences (NASDAQ:EXAS) Corporation (NASDAQ:EXAS) and increased the stock's price target to $95 from the previous $75. The firm's analyst highlighted the solid momentum of Exact Sciences' Cologuard business, noting a Compound Annual Growth Rate (CAGR) of approximately 31% from 2021 to 2023 for the product.
The analyst believes that Exact Sciences is well-positioned to capture 50% of the colorectal cancer (CRC) screening market share over time, driven by factors such as rescreening, a younger screening population, improved compliance, and an optimized test processing workflow. This outlook remains positive despite the recent investor concerns following the company's shift back to investment mode.
Exact Sciences has also received FDA approval for its next-generation Cologuard test, Cologuard Plus, which is expected to launch in 2025 and contribute to the growth of the company's Screening business.
Additionally, the company's blood-based CRC screening test, which showed promising data in September, is anticipated to further solidify its market position pending the upcoming BLUE-C blood test results and subsequent FDA approval and USPSTF review in the first half of 2025.
The analyst's optimism is reflected in the revised Discounted Cash Flow (DCF) valuation model, which now assumes a 10-year revenue CAGR of about 10%, operating margins nearing 20%, a reduced discount rate of 8.3% (down from 9.9%), and a terminal growth rate of 3.5%. These changes underpin the new price target of $95, suggesting that the stock holds attractive upside potential.
The firm reiterates its Buy rating on EXAS shares, considering them undervalued at current levels and not fully reflective of the company's core performance or long-term growth prospects.
In other recent news, Exact Sciences Corporation has made significant strides with the FDA approval of Cologuard Plus, an enhanced stool test for colorectal cancer screening. The test, recognized for its improved accuracy, boasts a sensitivity of 95% and specificity of 94%.
Analyst firms, including BTIG and Leerink Partners, have reiterated their confidence in the company, maintaining Buy ratings and setting price targets of $82 and $100 respectively.
Exact Sciences reported a year-over-year revenue increase of 12%, reaching $699 million in its second quarter earnings, largely driven by the use of its Cologuard test by over a million people. Other firms such as TD Cowen, Citi, and Piper Sandler have also maintained or raised their price targets for the company.
The company is also initiating the Falcon Registry study for Multi-Cancer Early Detection at Baylor Scott & White Health in Texas, aiming to enroll up to 25,000 participants.
These recent developments indicate Exact Sciences' ongoing efforts to advance in the field of cancer screening and diagnostics.
InvestingPro Insights
To complement Canaccord Genuity's bullish outlook on Exact Sciences Corporation (NASDAQ:EXAS), recent data from InvestingPro offers additional perspective on the company's financial position and market performance.
Despite the optimistic revenue growth projections highlighted in the article, InvestingPro data shows that Exact Sciences is currently not profitable over the last twelve months, with an adjusted operating income of -$282.27 million USD. This aligns with one of the InvestingPro Tips, which notes that analysts do not anticipate the company to be profitable this year.
However, supporting the growth narrative, Exact Sciences has demonstrated strong revenue growth, with a 13.54% increase over the last twelve months, reaching $2.61 billion USD. This growth trend is consistent with the analyst's positive outlook on the company's Cologuard business and potential market share expansion.
Investors should also note the company's impressive stock performance, with InvestingPro data showing a 52.22% price total return over the past three months. This strong return, highlighted as an InvestingPro Tip, may reflect growing market confidence in Exact Sciences' long-term prospects, including the anticipated launch of Cologuard Plus and the potential of its blood-based CRC screening test.
For those seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for Exact Sciences, providing deeper insights into the company's financial health and market position.
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