Company Reports

Exact Science’s first-quarter results were below our expectations. Although top-line revenue was in line, adjusted EBITDA was only $39 million, which was only 11% progress on the midpoint of the company’s full-year guidance of $325 million to $350 million. However, we expect later quarters to have both higher growth and better profitability, as the first quarter was affected by both seasonality and a difficult comparison with first-quarter 2023. This earnings report does not change our view of the long-term drivers of the company, either, including the favorable cost-benefit profile of its stool-based Cologuard test relative to blood-based tests, Exact’s strong execution, and its deepening entrenchment in the colorectal screening market. We maintain our fair value estimate of $78 and view shares as undervalued.

Exact Science's fourth-quarter results and 2024 guidance were in line with our expectations. The midpoint of the revenue guidance ranges is $2.83 billion for total revenue, $2.165 billion for screening, and $665 million for Precision Oncology, which are year-on-year growth rates of 13%, 16%, and 6%, respectively. We maintain our fair value estimate of $78 per share. The shares are trading at a 14% discount to this, which we view as slightly undervalued.

Exact Sciences delivered excellent third-quarter results on Cologuard expansion. Guidance for 2023 was raised again, with midpoint guidance for total revenue now at $2.481 billion, or $25 million higher than previous guidance, and screening revenue now at $1.85 billion. We maintain our fair value estimate of $78 per share. The shares are trading at a 17% discount to our fair value, which we view as modestly undervalued.

We are transferring coverage of Exact Sciences, keeping our moat rating at none and raising our fair value estimate to $78 per share from $68 previously. This is driven by a more optimistic view of Cologuard's revenue and the addition of molecular residual disease, or MRD, testing and single cancer screening revenue, and partially tempered by a more conservative view of its multicancer early detection, or MCED, test.

Exact Sciences has a multipronged approach to cancer testing. Current products are Cologuard, its flagship stool-based screening test for colorectal cancer, or CRC, and Oncotype Dx, its tissue-based genomic profiling platform with widespread use in breast cancer. It has a promising pipeline in the nascent liquid biopsy market, including a tissue-informed molecular residual disease, or MRD, test, a blood-based CRC screening test, and a multicancer early detection, or MCED, test.

Exact Sciences delivered strong second-quarter results on continued Cologuard expansion that allowed management to increase its top and bottom line outlooks for 2023. Although we do not think Exact has dug an economic moat yet, we have increased our near-term assumptions based on these trends, which has increased our fair value estimate to $68 per share from $64 previously. Shares still appear moderately overvalued to us.

Exact Sciences has a three-pronged approach to cancer testing: non-invasive Cologuard is likely to continue gaining share of colorectal cancer screening, and ongoing development of both early screening and minimum residual disease, or MRD, testing gives Exact exposure to the nascent liquid biopsy market. Exact is attempting to position itself as a winner regardless of whether liquid biopsy takes off, with Cologuard likely to remain a decent alternative to colonoscopy over the near term, while the firm’s pan-cancer and single-cancer liquid biopsy tests could offset Cologuard share loss in a scenario where liquid biopsy rapidly gains share.

Exact Sciences released strong test results for its next-generation Cologuard test that pushed shares up 9% in after-hours trading. The strength of these results has made investors hopeful that Cologuard will be able to fend off upcoming competition in the colorectal cancer screening market, but we still believe blood-based liquid biopsies hold significant promise versus the stool-based options. Therefore, we keep our $64 fair value estimate intact for now, suggesting Exact Sciences shares remain moderately overvalued. Also, our no moat rating continues to reflect the potential for increased competition in the long run, despite the solid results.

Exact Sciences delivered strong first-quarter results on better-than-anticipated Cologuard expansion that allowed management to increase its 2023 sales outlook and accelerate its timeline to reaching positive free cash flow in 2023, up from 2024. Exact's positive sales growth and profit trends inform our positive moat trend, although we do not think Exact has dug an economic moat quite yet. Based on these positive trends, we have tinkered with our near-term assumptions slightly, but we do not anticipate changing our $64 fair value estimate materially. Shares remain about fairly valued, too.

Exact Sciences has a three-pronged approach to cancer testing: non-invasive Cologuard is likely to continue gaining share of colorectal cancer screening, and ongoing development of both early screening and minimum residual disease, or MRD, testing gives Exact exposure to the nascent liquid biopsy market. Exact is attempting to position itself as a winner regardless of whether liquid biopsy takes off, with Cologuard likely to remain a decent alternative to colonoscopy over the near term, while the firm’s pan-cancer and single-cancer liquid biopsy tests could offset Cologuard share loss in a scenario where liquid biopsy rapidly gains share.

No-moat Exact Science delivered strong fourth-quarter and full-year 2022 results. Top line growth came in higher than expected, allowing the company to reach profitability on an adjusted EBITDA basis in the quarter, and it expects to maintain positive EBITDA through 2023. However, revenue guidance came in a bit below our projections, which may cut into our $69 fair value estimate, at first glance. Shares appear to be trading near fair value, though, especially considering the very high uncertainty around future cash flows.

Exact Sciences has a three-pronged approach to cancer testing: non-invasive Cologuard is likely to continue gaining share of colorectal cancer screening, and ongoing development of both early screening and minimum residual disease, or MRD, testing gives Exact exposure to the nascent liquid biopsy market. Exact is attempting to position itself as a winner regardless of whether liquid biopsy takes off, with Cologuard likely to remain a decent alternative to colonoscopy over the near term, while the firm’s pan-cancer and single-cancer liquid biopsy tests could offset Cologuard share loss in a scenario where liquid biopsy rapidly gains share.

Exact Sciences revealed its preliminary sales results for 2022, which appear higher than expected, and it reached profitability on an EBITDA basis in the fourth quarter, which was ahead of schedule. At first glance, we expect to raise our $69 fair value estimate by the mid to high single digits on a percentage basis. However, investors should note that very high uncertainty still surrounds long-term cash flows at this no-moat diagnostic firm.

Exact Sciences posted a strong third quarter that resulted in management raising its top- and bottom-line guidance for the full-year 2022, which appears to be positively affecting shares. Our near-term assumptions were mostly in line with management’s new outlook, and we are maintaining our fair value estimate of $69 a share.

Exact Sciences has a three-pronged approach to cancer testing: non-invasive Cologuard is likely to continue gaining share of colorectal cancer screening, and ongoing development of both early screening and minimum residual disease (MRD) testing gives Exact exposure to the nascent liquid biopsy market. Exact is attempting to position itself as a winner regardless of whether liquid biopsy takes off, with Cologuard likely to remain a decent alternative to colonoscopy over the near term, while the firm’s pan-cancer and single-cancer liquid biopsy tests could offset Cologuard share loss in a scenario where liquid biopsy rapidly gains share.

We are trimming no-moat rated Exact Sciences’ fair value estimate down to $69 per share after slightly reducing our full-year sales forecast following second-quarter results; shares remain moderately undervalued in our view.

Exact Sciences has a three-pronged approach to cancer testing: non-invasive Cologuard is likely to continue gaining share of colorectal cancer screening, and ongoing development of both early screening and minimum residual disease (MRD) testing gives Exact exposure to the nascent liquid biopsy market. Exact is attempting to position itself as a winner regardless of whether liquid biopsy takes off, with Cologuard likely to remain a decent alternative to colonoscopy over the near term, while the firm’s pan-cancer and single-cancer liquid biopsy tests could offset Cologuard share loss in a scenario where liquid biopsy rapidly gains share.

Exact Sciences had a good start to the year, and first-quarter sales of $487 million was slightly above FactSet consensus and in line with our forecasts. We maintain our no-moat, positive moat trend rating, and $76 fair value estimate. After a decline of over 6% on April 26 (seemingly related to broad-based market declines), we now see shares as undervalued, closing at a 23% discount to what we think they are worth.

Exact Sciences has a three-prong approach to cancer testing: non-invasive Cologuard is likely to continue gaining share of colorectal cancer screening, and ongoing development of both early screening and minimum residual disease (MRD) testing gives Exact exposure to the nascent liquid biopsy market. Exact is attempting to position itself as a winner regardless of whether liquid biopsy takes off, with Cologuard likely to remain a decent alternative to colonoscopy over the near term, while the firm’s pan-cancer and single-cancer liquid biopsy tests could offset Cologuard share loss in a scenario where liquid biopsy rapidly gains share.

Exact Sciences had a decent fourth quarter, benefiting from the expansion of covered colon cancer screening to age 45 (from 50 previously) and a greater ability for in-person sales calls. We are maintaining our $76 fair value estimate. While the shares trade slightly below this, we view them as fairly valued, considering our very high uncertainty rating. We also maintain our no-moat rating.