Empire Slaps $4 Target On Exact Sciences

Empire Asset Management’s Dr. Cathy Reese maintained a Sell rating on EXACT Sciences Corporation EXAS, while revising the price target to $4.

Exact Sciences reported 4Q15 revenues of $14.4 million and a net loss of about $40 million which was higher than the year ago net loss of $32.4 million. The company had $306.9 million in cash at the end of the fourth quarter.

Exact Sciences completed 38,000 Cologuard tests in 4Q, with an average reimbursement per test of $377. This compares with $374 in 3Q, $386 in 2Q and $390 in 1Q. The company expects the number of completed Cologuard tests in 1Q16 to be similar to 4Q due to winter weather and the lack of demand for Cologuard in early January.

Reese mentioned that a since a high number of Cologuard tests were not returned for processing in late 4Q15, the company’s Cologuard compliance rate would be negatively impacted in 1Q16.

“Cologuard’s compliance rate in 1Q2015 was 71%, in 2Q2015 and 73% in 3Q2015, so for compliance to be 71% for the entire year, we believe it decreased in 4Q2015 to ~68%. If this downward trend in compliance continues, it should be even more difficult for the company to achieve completion of 240,000 Cologuard tests in 2016,” the report mentioned.

Reese expects Exact Sciences’ growth to remain subdued with the US Preventive Services Task Force [USPSTF] recommending Cologuard only as an alternative test.