The Sell-Side Weighs In: Was The Exact Sciences Sell-Off Overdone?

EXACT Sciences Corporation EXAS stock tumbled nearly 10 percent Wednesday after the American Society of Clinical Oncology announced results from a new study on liquid biopsy tests for colorectal cancer that could pose a threat to EXACT’s Cologuard home screening test.

The new liquid biopsy test is up to 88 percent accurate, and co-author Ashish Nimgaonkar said more than 80 percent of patients who would prefer not to undergo a colonoscopy would also prefer a blood-based test to a stool-based test, according to the ASCO.

Clearly, the market sees the new test as bad news for EXACT, but here’s a sampling of what Wall Street analysts had to say  Wednesday.

Voices From The Street

Baird analyst Catherine Ramsey Schulte said Thursday’s weakness seems overdone. “On first glance, what stands out to us is the fact that out of 620 subjects, 111 (18 percent) had pre-cancer and another 327 (53 percent) had cancer, which likely skews the specificity much higher than if the study were done on the typical U.S. population,” Schulte said. 

Cowen analyst Doug Schenkel also used the word “overdone” to describe the market’s knee-jerk reaction. “The data looks interesting; however, this is a relatively small, single-site study that includes a disproportionate amount of diseased patients; there are also questions about study design,” he said. 

Canaccord Genuity analyst Mark Massero said investors should be aggressively buying EXACT on the dip. “In our opinion, this study is apples-and-oranges different than EXAS' Deep-C Study, which got Cologuard approved by the FDA and into guidelines,” Massero said. 

The new data also sparked a humorous Twitter debate between biotech expert Adam Feuerstein and QTR Research after QTR tweeted that EXACT shares “could honestly fall $10 on this news and still possibly be overvalued.”

Translation: I really don’t know anything about CTCs or the current status of liquid biopsies vs. Cologuard but I’m short $EXAS so I’ll tweet excitedely a few times and hope the stock price drops. https://t.co/QeszeDlGu3

— Adam Feuerstein (@adamfeuerstein) January 17, 2018

Shortly after, QRT responded with a well-reasoned rebuttal.

pic.twitter.com/fRrDj3dwDv

— Quoth the Raven (@QTRResearch) January 17, 2018

Ratings And Targets

It seems most analysts on Wall Street see Wednesday’s dip in EXACT as a buying opportunity, but some are more bullish than others:

• Baird has a Neutral rating and $56 price target.
• Cowen has an Outperform rating and $65 price target.
• Canaccord has a Buy rating and $60 price target.

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Photo courtesy of Exact Sciences.