Exact Sciences Grows On New Deals, Down On Coronavirus Scare

On Mar 23, we issued an updated research report on Exact Sciences Corporation (NASDAQ:EXAS) . Exact Science continues to make significant progress with its Cologuard test. The Genomic Health merger also buoys optimism. However, the coronavirus outbreak is causing share-price depreciation. Exact Sciences currently carries a Zacks Rank #3 (Hold).

Exact Sciences has demonstrated strength across its business, aided by impressive performances of the company’s Cologuard business. We look forward to Exact Science’s recently-closed merger with advanced molecular diagnostics company Genomic Health.

The Exact Sciences team is currently focusing on the three strategic priorities which are running its partnership with Pfizer (NYSE:PFE); enhancing Cologuard; and advancing pipeline of blood-based cancer diagnostic tests. In terms of the first priority, the company is confident about capturing at least 40% of the U.S. colorectal cancer screening market from about 5% now.

In terms of the second priority to enhance Cologuard, last October, the FDA approved a label expansion providing access to Cologuard for the 19-million average risk unscreened Americans aged 45-49, and increasing its total addressable market by $3 billion to $18 billion. With regard to the third priority of advancing blood-based cancer diagnostic program, the combination with Genomic Health will build on its success of creating an even stronger growth platform for Cologuard, Oncotype DX and its pipeline.

Meanwhile, escalating expenses are straining the company’s operating margin. Sole reliance on Cologuard and competitive headwinds is a major downside. Further, the coronavirus-led market mayhem is resulting in share-price depreciation. The global supply chain disruption is significantly hurting the company's revenues as well, which will likely be reflected in the first-quarter results.

Over the past three months, Exact Sciences has been underperforming its industry. The stock plummeted 46.6% as compared with the industry's 19.9% decline.

Key Picks

Some better-ranked stocks in the broader medical space are ResMed Inc. (NYSE:RMD) , Medtronic plc (NYSE:MDT) and Hill-Rom Holdings, Inc. (NYSE:HRC) .

ResMed has a projected long-term earnings growth rate of 14.4%. It currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Medtronic’s long-term earnings growth rate is estimated at 7.1%. The company presently holds a Zacks Rank #2.

Hill-Rom’s long-term earnings growth rate is estimated at 11.1%. It currently carries a Zacks Rank of 2.

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