Analysts Bullish On Exact Sciences After Positive Coverage Decision

The shares of EXACT Science (EXAS) are climbing after health insurance giant UnitedHealth (UNH) agreed to cover the company's Cologuard test, starting July 1. Cologuard is a noninvasive, at-home screening test for colon cancer. A number of analysts responded to the news by raising their price targets on EXACT Sciences.

TARGET INCREASES: Canaccord analyst Mark Massaro raised his price target on EXACT Sciences to $40 from $38. About 30M more people will be able to be reimbursed for Cologuard tests as a result of UnitedHealth's decision, and a total of more than 227M people will be able to get reimbursed for the test by their insurers as of July 1, the analyst stated. The analyst expects the company's 2017 revenue to come in at the high end of its 2017 guidance range of $195M-$205M, although he noted that the consensus outlook was $210M before yesterday. He increased his 2020 earnings per share estimate for the company to 90c from 80c, but he believes that estimate could be conservative. The analyst kept a Buy rating on the stock and continued to identify it as a top pick. Benchmark analyst Raymond Myers increased his price target on Exact Sciences to $50 from $34 as he raised his 2018 test volume growth forecast for Cologuard to 55% from 50% and increased his revenue forecast per test to $470 from $440. He kept a Buy rating on the shares.

DEMAND SEEN AS STRONG: "Essentially" all major insurers now cover Cologuard and demand for the test should continue to be strong, according to William Blair analyst Brian Weinstein. By the middle of 2018, most major insurers should have deals with EXACT Sciences to cover the test for at least the $510 that Medicare is paying, the analyst predicted. He kept an Outperform rating on the stock.

PRICE ACTION: In morning trading, EXACT Sciences rose nearly 10% to $35.90.

Disclosure: None. 


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