Cologuard Owner Exact Sciences Has 30% Upside Says Wall Street

Last month, Exact Sciences (EXAS) launched the “Box Out Colon Cancer” campaign with former NBA star Jamal Mashburn to encourage Americans to get screened for colon cancer, the nation’s second deadliest cancer. Known for its DNA-based Cologuard colorectal screening test, Exact Sciences is advancing its mission to lead global diagnostics.   

The company recently published encouraging results for its Cologuard-Plus product in the New England Journal of Medicine. The pivotal BLUE-C study demonstrated that Cologuard Plus achieved 94% sensitivity for detecting cancer and 43% sensitivity for advanced precancers. This proved to be superior to the performance of an independent fecal immunochemical test (FIT).   

Guardant Health (GH), a competitor, also announced favorable outcomes for its colorectal cancer screening test. However, this blood draw test was less effective at identifying early-stage diseases and precancerous polyps compared to Cologuard.   

With U.S. Food and Drug Administration (FDA) approval pending, Exact Sciences plans to launch its next-generation test in 2025. Despite past challenges with rising expenses and losses leading to a 52-week stock low, expectations for heavy adoption rates of Cologuard among health care professionals and the introduction of new screening products suggest a promising financial outlook for Exact Sciences. 

EXAS Is Expanding To New Cancer Types 

While Exact Sciences’ Screening segment, primarily driven by Cologuard, accounts for approximately 75% of total revenue, the company is diversifying its dependence on its flagship product. The Precision Oncology business, featuring genomic tests like Oncotype DX and OncoExTra, is also experiencing significant growth. In the fourth quarter of 2023, revenue from the Screening and Precision Oncology segments increased by 21% and 12%, respectively.   

Among the promising developments in its oncology portfolio is the non-endoscopic Oncoguard Esophagus test, aimed at detecting esophageal cancer and pre-cancer. This type of cancer has been increasing in prevalence in the U.S. in recent decades. In March 2024, Exact Sciences released data demonstrating the test’s high sensitivity and specificity. While not yet FDA-approved, this test could become a crucial component of Exact Sciences’ expanding cancer detection suite, which also includes Oncoguard Liver.   

Further expanding its diagnostic range, Exact Sciences is working on a blood-based screening test for colorectal cancer and a genomic test to assess the necessity of radiation therapy in breast cancer patients. These innovations underscore the company’s strategic expansion into comprehensive cancer diagnostics. 

Wall Street Is Unanimously Bullish On EXAS 

As Exact Sciences expands its revenue streams and manages its growing expenses, improved financial outcomes are anticipated. Analysts project a reduced net loss of $0.86 per share for the current year, with expectations to reach a breakeven point by 2025.   

Recently, Citi initiated a ’90-day positive catalyst watch’ for Exact Sciences, noting that competitive threats have diminished. This sentiment was reinforced as Guardant Health and the privately-held Freenome reported less favorable outcomes for their respective cancer detection tests. Citi highlighted that Cologuard continues to outperform these alternatives due to its superior sensitivity.   

The consensus among Wall Street analysts is strongly positive, with 14 Buy ratings issued in the last three months and no Hold or Sell recommendations. The average analyst price target for Exact Sciences is $92, suggesting a potential upside of approximately 30%.   

Exact Sciences is set to announce its first-quarter financial results for 2024 after the market closes on May 8th, an event that investors and analysts will watch closely.