On Wednesday, Piper Sandler maintained its Overweight rating on Exact Sciences (NASDAQ:EXAS) with a stable price target of $85.00. The firm's analyst pointed out that Exact Sciences released a disappointing update to its guidance, revising revenue expectations downward by approximately $90 million at the midpoint.
The company, known for its solid track record, is expected to face investor skepticism until a positive shift in sales trends occurs.
The analyst noted that external factors such as billing changes and recent hurricanes might have influenced the company's performance. However, a significant internal issue identified was the lack of expected seasonal sales acceleration in September and October, primarily due to shortcomings in promotions, marketing, and sales strategies.
Exact Sciences has not provided detailed specifics on the matter, but it is believed that solutions may include adjustments in compensation, promotional activities, and strategies for targeting customers. The company has acknowledged that it might take one or two quarters to address these challenges. Nonetheless, Exact Sciences remains confident about achieving accelerated growth by 2025 and has reaffirmed its long-term revenue and margin goals.
Following the update, the stock showed indications of a 30% decline. Despite this, Piper Sandler's analyst recommended purchasing shares, suggesting a potential upside from the current levels based on the company's future prospects.
In other recent news, Exact Sciences experienced a series of significant developments. The company reported third-quarter earnings of $709 million, up 13% year-over-year, but falling short of the projected $716.8 million. The net loss of -$0.21 per share was slightly worse than the -$0.20 anticipated by analysts. Following these results, Exact Sciences revised its full-year guidance downwards, with the new revenue forecast standing at $2.73-2.75 billion, significantly below the consensus estimate of $2.83 billion.
Analysts from Benchmark, Baird, and BTIG have all revised their price targets for the company, maintaining positive ratings despite the disappointing financial performance. Benchmark lowered its target to $65, Baird reduced it to $67, and BTIG cut it to $65. These adjustments reflect the company's recent performance and the revised revenue forecast.
Despite these challenges, Exact Sciences announced several pipeline advancements, including FDA approval for its next-generation Cologuard Plus test and promising data from its blood-based colorectal cancer screening test. The company's strong cash position of $1.02 billion as of the end of the third quarter signifies the company's ongoing efforts to navigate through the current challenges.
InvestingPro Insights
Despite the recent guidance revision and stock price decline, Exact Sciences (NASDAQ:EXAS) shows some resilience in its financial metrics. According to InvestingPro data, the company's revenue growth stands at 13.54% for the last twelve months, with a robust gross profit margin of 73.19%. This indicates that despite challenges, Exact Sciences maintains a strong core business model.
An InvestingPro Tip highlights that Exact Sciences has demonstrated a strong return over the last three months, with the stock showing a 27.79% price total return in this period. This aligns with Piper Sandler's recommendation to purchase shares, suggesting potential upside from current levels.
However, investors should note that another InvestingPro Tip indicates that analysts do not anticipate the company will be profitable this year. This is reflected in the negative operating income of -$282.27 million for the last twelve months.
For a more comprehensive analysis, InvestingPro offers additional tips and insights that could be valuable for investors considering Exact Sciences' stock. The platform currently lists 13 additional tips for EXAS, providing a deeper understanding of the company's financial health and market position.
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