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Here's Why Investors Should Buy Exact Sciences (EXAS) Stock
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Exact Sciences Corporation (EXAS - Free Report) is gaining from continued strength across the Screening and Precision Oncology businesses. The impressive Cologuard volume growth buoys optimism. A promising solvency position is an added advantage. However, mounting expenses and stiff competition do not bode well.
In the past year, this Zacks Rank #2 (Buy) stock has lost 20.8% compared with a 17.7% decline of the industry and a 19.1% decline of the S&P 500 composite.
The renowned global medical device company has a market capitalization of $10.68 billion. The company’s long-term expected growth rate of 27.5% compares with the industry’s growth projection of 18.4%.
Let’s delve deeper.
Key Drivers
Q3 Upsides: Exact Sciences exited the third quarter of 2022 with better-than-expected results. The quarter’s net loss per share was narrower than the year-ago period. Robust revenues from the Screening and Precision Oncology segments contributed to the third-quarter top line. The company noted that more than 292,000 healthcare providers ordered Cologuard from its launch till the end of September. The growing uptake of the company’s Oncotype DX Breast and therapy selection products are major advantages.
First Strategic Priority Bodes Well: The company is currently focusing on three areas to enhance Cologuard growth. The first strategy is building the best and most effective commercial organization in healthcare by investing in the leadership team, training and sales force effectiveness. Secondly, improving the customer experience by making it simpler to order Cologuard electronically and continue rescreening patients every three years. The third strategy is screening more people starting at age 45 to catch cancer earlier. In the third quarter, 10,000 new healthcare providers ordered Cologuard, and more than 292,000 have ordered since the launch as of September. Moreover, the company added 65,000 new ordering healthcare providers.
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Overall Strong Solvency: Exact Sciences exited the third quarter of 2022 with cash and cash equivalents and marketable securities of $669.1 million compared with $728 million at the end of the second quarter of 2022. The company reported long-term debt of $50 million on its balance sheet at the end of the third quarter of 2022, much lower than its current short-term cash level, indicating a good solvency position. This is good news, particularly at the time of an overall tough macroeconomic scenario when the company is faced with a manufacturing and supply halt globally.
Downsides
Escalating Costs: In the third quarter of 2022, Exact Sciences’ gross margin contracted 292 basis points (bps) to 71.7%. Meanwhile, research and development expenses rose 20.5% year over year. Sales and marketing expenses fell 4.5%. General and administrative expenses rose 2.9% year over year. These mounting expenses pushed up adjusted operating costs by 2.6% year over year, resulting in an adjusted operating loss in the quarter under review, placing 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 90 days, the Zacks Consensus Estimate for Exact Sciences’ loss for 2022 has moved down from $4.30 to $3.84.
The Zacks Consensus Estimate for 2022 revenues is pegged at $2.04 billion, suggesting a 15.2% rise from the 2021 reported number.
Other Key Picks
Some better-ranked stocks in the broader medical space are AMN Healthcare Services, Inc. (AMN - Free Report) , Boston Scientific Corporation (BSX - Free Report) and Merit Medical Systems, Inc. (MMSI - Free Report) .
AMN Healthcare, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 3.3%. AMN’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average beat being 10.9%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
AMN Healthcare has lost 10.6% compared with the industry’s 30.3% decline in the past year.
Boston Scientific, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 10.3%. BSX’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, the average beat being 1.9%.
Boston Scientific has gained 6.8% against the industry’s 42.6% decline in the past year.
Merit Medical, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 11%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average beat being 25.4%.
Merit Medical has gained 13.7% against the industry’s 8.7% decline in the past year.
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Here's Why Investors Should Buy Exact Sciences (EXAS) Stock
Exact Sciences Corporation (EXAS - Free Report) is gaining from continued strength across the Screening and Precision Oncology businesses. The impressive Cologuard volume growth buoys optimism. A promising solvency position is an added advantage. However, mounting expenses and stiff competition do not bode well.
In the past year, this Zacks Rank #2 (Buy) stock has lost 20.8% compared with a 17.7% decline of the industry and a 19.1% decline of the S&P 500 composite.
The renowned global medical device company has a market capitalization of $10.68 billion. The company’s long-term expected growth rate of 27.5% compares with the industry’s growth projection of 18.4%.
Let’s delve deeper.
Key Drivers
Q3 Upsides: Exact Sciences exited the third quarter of 2022 with better-than-expected results. The quarter’s net loss per share was narrower than the year-ago period. Robust revenues from the Screening and Precision Oncology segments contributed to the third-quarter top line. The company noted that more than 292,000 healthcare providers ordered Cologuard from its launch till the end of September. The growing uptake of the company’s Oncotype DX Breast and therapy selection products are major advantages.
First Strategic Priority Bodes Well: The company is currently focusing on three areas to enhance Cologuard growth. The first strategy is building the best and most effective commercial organization in healthcare by investing in the leadership team, training and sales force effectiveness. Secondly, improving the customer experience by making it simpler to order Cologuard electronically and continue rescreening patients every three years. The third strategy is screening more people starting at age 45 to catch cancer earlier. In the third quarter, 10,000 new healthcare providers ordered Cologuard, and more than 292,000 have ordered since the launch as of September. Moreover, the company added 65,000 new ordering healthcare providers.
Overall Strong Solvency: Exact Sciences exited the third quarter of 2022 with cash and cash equivalents and marketable securities of $669.1 million compared with $728 million at the end of the second quarter of 2022. The company reported long-term debt of $50 million on its balance sheet at the end of the third quarter of 2022, much lower than its current short-term cash level, indicating a good solvency position. This is good news, particularly at the time of an overall tough macroeconomic scenario when the company is faced with a manufacturing and supply halt globally.
Downsides
Escalating Costs: In the third quarter of 2022, Exact Sciences’ gross margin contracted 292 basis points (bps) to 71.7%. Meanwhile, research and development expenses rose 20.5% year over year. Sales and marketing expenses fell 4.5%. General and administrative expenses rose 2.9% year over year. These mounting expenses pushed up adjusted operating costs by 2.6% year over year, resulting in an adjusted operating loss in the quarter under review, placing 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 90 days, the Zacks Consensus Estimate for Exact Sciences’ loss for 2022 has moved down from $4.30 to $3.84.
The Zacks Consensus Estimate for 2022 revenues is pegged at $2.04 billion, suggesting a 15.2% rise from the 2021 reported number.
Other Key Picks
Some better-ranked stocks in the broader medical space are AMN Healthcare Services, Inc. (AMN - Free Report) , Boston Scientific Corporation (BSX - Free Report) and Merit Medical Systems, Inc. (MMSI - Free Report) .
AMN Healthcare, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 3.3%. AMN’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average beat being 10.9%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
AMN Healthcare has lost 10.6% compared with the industry’s 30.3% decline in the past year.
Boston Scientific, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 10.3%. BSX’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, the average beat being 1.9%.
Boston Scientific has gained 6.8% against the industry’s 42.6% decline in the past year.
Merit Medical, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 11%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average beat being 25.4%.
Merit Medical has gained 13.7% against the industry’s 8.7% decline in the past year.