On Thursday, Barclays (LON:BARC) initiated coverage on Exact Sciences (NASDAQ:EXAS), a leading molecular diagnostics company with a market capitalization of $10.14 billion, assigning the stock an Overweight rating and setting a price target of $70.00. The firm’s analyst highlighted the company’s strong position heading into 2025, citing a solid fundamental setup and attractive valuations at current levels. The stock has shown momentum with an 8.62% return over the past week. According to InvestingPro’s Fair Value analysis, the stock is currently fairly valued, with analyst targets ranging from $61 to $95.
According to Barclays, Exact Sciences has demonstrated a consistent track record of execution and is expected to achieve its near-term (NT) and long-term (LT) targets, supported by its strong financial health. InvestingPro data shows the company maintains robust liquidity with a current ratio of 2.12, indicating strong ability to meet short-term obligations. While there are concerns in the market regarding the competition that Exact Sciences’ Cologuard test could face from emerging liquid biopsy colorectal cancer (CRC) screening methods, the analyst believes these fears are exaggerated.
The analyst pointed out that the diagnostics markets are driven by commercial performance and that the companies with the most robust sales forces tend to succeed. Exact Sciences has had ample time to establish a significant presence in the market. Furthermore, liquid biopsy is anticipated to be adopted by a large segment of the screening population that is currently averse to stool-based tests, which may not result in significant market share losses for Cologuard in the near to medium term.
Barclays also noted that the CRC screening market is large and diverse enough to accommodate multiple players, and that patient preferences play a crucial role. The firm suggests that fecal immunochemical testing (FIT) and colonoscopies, which are currently more common, are likely to be the primary sources of market share for Cologuard due to its higher accuracy compared to FIT and its ease of use relative to colonoscopies.
The analyst further mentioned that while Cologuard does face competition, the market dynamics are such that there is room for several successful products. Exact Sciences also has an attractive pipeline that could potentially quadruple their total addressable market (TAM) by adding new indications in multi-cancer early detection (MCED) screening and minimal residual disease (MRD) assessment. The company’s strong execution is reflected in its impressive 72.96% gross profit margin and 11.91% revenue growth over the last twelve months. For deeper insights into Exact Sciences’ financial health and growth prospects, including additional ProTips and comprehensive analysis, visit InvestingPro.
In other recent news, Exact Sciences is making significant strides in the field of cancer detection and diagnosis. The company is set to launch its Oncodetect MRD test in Q2 2025, following successful clinical validation data showing a strong association with recurrence in stage III colon cancer patients. The test has also shown prognostic value in stages II and IV colon cancer and rectal cancer.
Analyst firms such as CFRA, BTIG, TD Cowen, Piper Sandler, Leerink Partners, Bernstein SocGen Group, Stifel, and Wolfe Research have responded positively to Exact Sciences’ recent developments, including the approval of Cologuard Plus by the U.S. Food and Drug Administration and a 16% price increase for the test by the Centers for Medicare & Medicaid Services.
On the financial front, Exact Sciences reported a 13% year-over-year revenue increase in Q3 2024, reaching $709 million, and a substantial 75% increase in adjusted EBITDA to $99 million. 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.
These developments highlight Exact Sciences’ commitment to financial growth and advancements in cancer detection, demonstrating the company’s ongoing dedication to improving patient outcomes through innovative diagnostic solutions.
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