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Exact Sciences: Why the Stock Price Is Soaring

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Stock performance

On August 22, Exact Sciences (EXAS) is trading at a stock price of $62.95, which represents ~25.78% growth from the close of $50.05 on August 21.

On August 21, Exact Sciences’ stock price closed at $50.05, which represents ~34% growth from its 52-week low of $37.36 on April 6. Notably, Exact Sciences hit its 52-week high of $71.59 on June 18.

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Reason for the hike 

On August 22, Exact Sciences entered into an agreement with Pfizer (PFE) for the co-promotion of Cologuard. Cologuard is a non-invasive stool DNA screening test for individuals with colorectal cancer. Currently, Cologuard is the only FDA approved non-invasive stool DNA screening test for colorectal cancer.

Pfizer and Exact Sciences will jointly participate and carry out promotional activities for Cologuard. Pfizer and Exact Sciences want to increase colorectal cancer screening rates by increasing the adoption of Cologuard. Cologuard is covered by Medicare and other major health insurance plans.

In the second quarter, Exact Sciences’ Cologuard reported revenues of $102.9 million, which reflects ~78% YoY (year-over-year) growth. In the second quarter, the test volume with Cologuard was 215,000, which reflects an ~59% rise YoY.

Financials and outlook 

Exact Sciences revenues are mainly from Cologuard sales. In the second quarter, Exact Sciences reported a gross margin and operating expenses of 74% and $108.7 million, respectively.

In the second quarter, Exact Sciences reported a net loss of $36.4 million—compared to $30.8 million in the second quarter of 2017. At of the end of the second quarter, Exact Sciences had cash, cash equivalents, and marketable securities of $1.2 billion.

Exact Sciences expects net revenues to be $420 million–$430 million in fiscal 2018.

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Analysts’ recommendations

Of 13 analysts tracking Exact Sciences in August, seven of the analysts recommended a “strong buy,” two recommended a “buy,” and four recommended a “hold.” On August 22, Exact Sciences had a consensus 12-month target price of $61.5.

Peers’ ratings

In August, of the nine analysts tracking Clovis Oncology (CLVS), ~78% of the analysts recommended a “buy.” Among the eight analysts tracking Exelixis (EXEL), ~88% of the analysts recommended a “buy.”

On August 22, Clovis Oncology and Exelixis had consensus 12-month target prices of $69.17 and $79.26, which represents a return on investment of ~87.71% and ~79.26% over the next 12 months.

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