Exact Sciences Corporation (EXAS – Research Report) is a groundbreaking med tech company focused on developing screening tests for early stage cancer. This results in earlier detection and better treatment outcomes for patients. Established back in 1995, EXAS received FDA approval for its first product, the at-home colorectal cancer screening test Cologuard back in 2014.

All good, really, and a strong foundation for a growing med-tech company. Even better, from an investor’s perspective, is the overall state of the company: its product quality, marketing initiative, research pipeline, and stock performance all point to a company that is poised for further growth. We’ll take a brief look at the company’s history and current performance, and then check with TipRanks top-rated analysts to see what they have to say.

Innovation, Marketing, and Future Products

Cologuard is Exact Science’s first product to hit the market. The innovative colon cancer screening test uses a multi-marker approach to enhance both sensitivity and accuracy, is shipped directly to the patient’s home, and is delivered with a convenient pre-paid shipping label for return to the lab. Results are made available within two weeks. The test has demonstrated an excellent 87% specificity rating while detecting 92% of colon cancers in a clinical study of 10,000 patients. In plain English, that means Cologuard showed a 13% false positive rate – an error on the side of caution.

On the marketing end, this past August, Exact Sciences entered an agreement with Pfizer (PFE). The deal makes the larger drug company’s network and connections available to boost promotional activities and marketing support for Cologuard. Pfizer stands to gain promotional fees and royalties for the next three years, while Exact Sciences will benefit from increased sales and exposure. Cologuard has already penetrated about one-third of the primary care health providers in the US market in its first four years; the Pfizer agreement promises to expand that reach significantly.

Exact Sciences is not resting on the initial successes of Cologuard. The company is expanding its DNA marker test approach to cancer detection and developing early screening tests for both lung and liver cancers. The aim of both programs is to improve the sensitivity of cancer screening while sparing patients invasive biopsy surgical procedures. The research and development for the new screening focuses on tests for blood-borne DNA markers.

A Marketing Agreement and a Strong Q3 Power the Share Price

EXAS showed a strong bounce in the stock markets at the end of August, jumping from $50 to $67 in just two days. The stock price held above the $60 mark through October, and after a second more modest bounce stands today at $74.

View EXAS stock chart

The two bounces, at the end of August and the end of October, coincide with specific events. The marketing agreement with Pfizer was announced on August 22, and prompted a sudden, positive market reaction. Yesterday’s bounce came after the October 30 Q3 earnings report, which was full of good news for Exact Sciences.

The earnings report showed improvements both over Q2 and over last year’s Q3. Year-over-year revenue increased 63%, test volume for Cologuard increased 49%, and average revenue per test increased by 9%. In response to the improved revenue streams, the company raised its guidance for 2018 total revenue, giving an estimate of $435 to $440 million.

The Analysts Agree

With six ‘Buy’ ratings in the last two months, and a 22% upside on the target price, analysts are clearly bullish on EXAS stock.

See EXAS analyst ratings

Top analyst Brandon Couillard (Track Record & Ratings), of Jefferies, specifically cited the strong Q3 report, saying, “The quarter signaled that recent operational issues are behind the company and that its momentum is rebounding.” He raised his price target to $84.

The marketing agreement with Pfizer was the key factor for Canaccord Genuity’s Mark Massaro (Track Record & Ratings), who said, “the focus will now turn to how well the Pfizer (PFE) and Exact Sciences sales reps work together in Q4 and beyond.” Massaro also acknowledged the strong Q3 earnings, describing the report as “another beat and raise quarterly result.” He sets his price target even higher at $87.

As you saw in the analyst ratings above, most of the price targets are clustered around $90. The important outlier among them is Doug Schenkel (Track Record & Ratings), writing for Cowen. Two months ago, just after news of the EXAS-PFE marketing agreement went public, Schenkel boosted his price target on Exact Sciences – from $65 to $100. Schenkel said that he “believes his revised 2020 revenue forecast still has an upside bias as the deal may have effectively doubled its commercial reach.” This indicates sizable upside potential of 35% from current trading levels.

The Bottom Line

With EXAS, the analysts are in agreement: this stock is going places. The consensus is a ‘Strong Buy,’ with an average price target of $90 (but don’t forget that $100 outlier) giving the 22% upside mentioned above.

View EXAS Price Target & Analyst Ratings Detail

Exact Sciences is moving forward on a solid foundation: a proven product, a new marketing initiative to expand – or even double – its reach, and a strong quarterly performance. The company is optimistic and researching ways to take its cancer screening technologies into new niches. It’s no surprise that every analyst who has reviewed EXAS recently has given it a ‘Buy’ rating.

Enjoy the Research Report on the Stock in this Article:

Exact Sciences (EXAS) Research Report