Exact Science stocks are down 11% this week. ‘what’s going on?’
Exact sciences (EXAS) stock tumbled Thursday — extending its losses this week — on growing competition Guardian health (GH) and Natera (INTRA) colon cancer diagnosis.
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Despite the promising preliminary report, the actual stock fell 5.7% to 50.48 on the stock market today. Shares are down 11 percent this week. The actual stock is consolidating with a 72.83 buy point. Marketing promotion.
“what’s going on?” Evercore ISI analyst Vijay Kumar said in a client report.
As it turns out, there are a number of “headline risks” facing real science stocks, William Blair analyst Andrew Brackman said in a note.
Concerns of competitors
Exact Sciences develops Cologard, a stool-based test that diagnoses colorectal cancer. Last summer, the Food and Drug Administration approved rival Guardian Health’s blood test to screen for colon cancer. Natera recently published promising results for its blood test.
Investors are concerned that the American Cancer Society will include Guardant Health’s blood-borne diagnostic device Shield in its screening guidelines by 2025, Brackman said. Today, the ACS recommends that people age 45 and older who have an average risk of developing colon cancer undergo routine screening with a stool-based test or colonoscopy.
“We think fears on the competitive front are overblown,” Brackman said.
Natera’s data is early.
In addition, Natera’s information remains up-to-date. Evercore’s Kumar said that Natera would need to conduct research involving at least 20,000 to 25,000 samples, which would require the company to spend hundreds of millions of dollars.
“This seems 3 years away and it seems foolish to us if EXAS shares are under pressure because of this,” he said.
Specifically, Exact Sciences is working to develop its own blood test for colorectal cancer screening. Of note, experts expect blood tests to be less effective than stool-based screening tests.
But Kumar predicts that the Exact blood test will come out ahead of its competitors when it comes to detecting advanced adenomas. When these primary polyps are identified, they can be removed before they become cancerous tumors.
Natera is owned by Cathy Wood’s ARK Creative (Sheet) Exchange Traded Fund. The stock has a strong IBD Digital Relative Strength Index of 96, out of an excellent 99. This means Natera stock ranks in the top 4% of all stocks in terms of trailing 12-month performance.
The actual science stock has a minimum RS rating of 19.
Analysts bullish on Exact Sciences stock.
William Blair Brackman said the exact sciences are under pressure as the Supreme Court hears a case requiring insurers to cover services included in parts A and B of the US Preventive Services Taskforce’s recommendations. This includes Cologard.
“This can really be a big problem for companies that have tests that include guidance on refunds,” he said. “We’re looking for more diligence here, but now look at the ways around this for Cologuard and the impact on new tests that aren’t included in the guidelines will be more impactful.”
Brackman maintains an outperform rating on the exact sciences stock.
Similarly, Evercore Kumar gave the stock a firm rating with a price target of 70.
In the year Note that there will be moving parts in 2025. But it still expects 10% net growth in the first half of the year and mid-teens for the second half.
“The 2H ramp seems reasonable to us and visibility is high because the drivers are again screens, care-gap and pricing,” he said. “EXAS has stated that it is seeing signs of business execution improvement…which with the blood coming in and the (minimum residual disease) data, the stock at ~$50 looks very compelling to us.”
Follow Alison Gatlin on X/Twitter @IBD_AGAtlin.
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