On Wednesday, Citi reiterated its Buy rating on Exact Sciences (NASDAQ:EXAS) Corporation (NASDAQ:EXAS) shares, maintaining a $100.00 price target. Following the release of competitor Freenome's data, which did not meet expectations, Citi believes that the competitive overhang has been removed, potentially leading to an upside to estimates as the first quarter results approach in early May.
Exact Sciences' shares had previously declined from its peak of around $100, a fall attributed to investor concerns over Freenome's anticipated data release. With the data now public and falling short of expectations, Citi points out that Exact Sciences' Cologuard test remains a superior option due to its higher sensitivity, and the competitive threat has been alleviated. This change is expected to allow longer-term investors to re-engage with the stock.
Citi draws attention to Exact Sciences' stock performance following Guardant Health (NASDAQ:GH)'s Eclipse study results, which had a similar effect in removing screening concerns at that time. The stock saw a significant increase, approximately 15% the day after the Eclipse results were published, and continued to rise from about $52 to $100 over the subsequent seven months. This historical performance is cited as a potential indicator of Exact Sciences' stock trajectory now that the competitive pressure has eased.
Additionally, Citi notes that Exact Sciences has consistently outperformed and raised expectations for multiple quarters. With the first quarter results on the horizon, the firm views the current estimates as conservative and believes there is room for positive surprises. This optimistic outlook is based on the company's track record and the recent developments within the competitive landscape.
InvestingPro Insights
As Exact Sciences Corporation (NASDAQ:EXAS) anticipates its first quarter results, investors may find additional context in the latest metrics and analysis provided by InvestingPro. The company's market capitalization stands at a robust $13.39 billion, reflecting significant investor confidence despite a negative P/E ratio of -65.61. This valuation metric suggests that investors are pricing in growth expectations, even as the company operates at a loss. The adjusted P/E ratio for the last twelve months as of Q4 2023 is slightly less negative at -47.94, indicating some improvement in earnings relative to the stock price.
InvestingPro Tips highlight that while analysts have revised earnings downwards for the upcoming period, Exact Sciences has shown a strong return over the last month, with a 24.06% increase, and a significant return over the last week of 10.26%. These returns may appeal to momentum investors looking for short-term gains. However, the RSI suggests the stock is in overbought territory, which could signal a potential pullback. It's also noteworthy that the company has not been profitable over the last twelve months, and analysts do not anticipate it will be profitable this year. Yet, the company's liquid assets exceed its short-term obligations, indicating a solid liquidity position.
For those looking to delve deeper into Exact Sciences' financials and future outlook, InvestingPro offers a wealth of additional tips. There are 7 more InvestingPro Tips available that can provide further insights into the company's performance and potential investment opportunities. To access these tips, consider the InvestingPro service and use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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