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Biotech
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Re: EXAS - Cathy Woods dumpster diving or shrewd move ?Exact Sciences Stock Falls After Earnings. Heres What Wall Street Is Saying. -- Barrons.com By Bill Alpert / Barrons Aug 3, 2022 Sales of the widely-advertised Cologuard cancer screen beat forecasts, in Exact Sciences's June quarter. But the stock is falling after the late Tuesday report. Around midday Wednesday, the shares (ticker: EXAS) were off 4%, to $46, amid a 1.4% rise for the Nasdaq Composite index. Valuation multiples have fallen for growing, but yet unprofitable, biotech stocks, notes Benchmark analyst Bruce Jackson. So his Wednesday note lowered his price target on the stock to $54 from $85, while maintaining a Buy rating. Overall sales for Exact Sciences's June quarter were $522 million, representing 26% growth if one backs out last year's sales bump from Covid-19 tests. The quarter's sales number was well ahead of the consensus forecast for less than $500 million. The Cologuard test for colon cancer grew some 30% and contributed two-thirds of the company's revenue. But analysts noted that Exact's guidance for about $2 billion in revenue this year represents a slight pullback -- despite the June quarter beat. That struck Raymond James analyst Andrew Cooper as conservative. He nonetheless trimmed his price target to $70 from $80, while keeping an Outperform rating. Investors soured on the biotech sector well before this year's stock market drop. The pandemic enthusiasm for fast-growing firms like Exact Sciences gave way to an impatience for those companies to reach profitability. In the June 2022 quarter, Exact lost $166 million, or 94 cents a share. Earnings before interest, taxes, depreciation and amortization, or Ebitda, were still negative, at $111 million -- although the loss shrank to $46 million, if one ignores noncash costs like stock compensation. Exact seems to understand that investors want to see a profit, and it says it aims to report positive Ebitda in 2024 (adjusted, still, for stock compensation). Raymond James's Cooper forecasts a $40 million adjusted Ebitda for 2024 -- with net income still negative, at $2.78 a share. Hopes for the long-term profitability of Exact and its cancer-test rivals, have focused on tests that detect cancer from a simple blood sample -- instead of the stool samples required for a test like Cologuard. In the conference call with investors Tuesday, Exact executives said they believe that Cologuard's sensitivity and precision will preserve its market share, as blood tests reach the market for colon cancer and other types of cancer. Guardant Health (GH) is developing blood screens for cancer, and Raymond James's Cooper expects Guardant will discuss its progress in its earnings report Thursday. |
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