BTIG Expects 55% Upside In Exact Sciences

The 35-percent sell-off in shares of EXACT Sciences Corporation EXAS offer an attractive entry point, according to BTIG Research. 

The molecular diagnostics product company's main product is Cologuard, which is used to detect colorectal cancer.

The Analyst

Analyst Sean Lavin upgraded Exact Sciences from Neutral to Buy with a $60 price target, suggesting 55-percent upside.

The Thesis

A second set of lung data did not meet expectations, impacting Exact Sciences' shares, Lavin said in a Tuesday note.

"This was negative news but we do not feel much value was in the stock for this future test. Still, this issue impacted shares," the analyst said. 

Competitive blood test data was released, but BTIG does not believe the products are competitive in the near term "for many reasons," Lavin said. 

While Exact Sciences' spend is increasing, Lavin said this isn't bad news. Some investors were surprised by the size of the company's salesforce growth and the lack of expense guidance for 2018, he said. 

"This likely pressured shares, and while there is some risk expenses could grow faster than investors like, it does increase the likelihood each quarter of meeting or exceeding revenue estimates." 

Exact Sciences will at least meet consensus expectations for the first quarter, despite expectations that the flu season dampened ordering, Lavin said. Flu-related softness is unlikely to impact the company's long-term value, the analyst said. 

The Price Action

Exact Sciences shares had risen over 64 percent over the past year through Monday. 

The stock was up nearly 4 percent at the time of publication Tuesday afternoon. 

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Photo courtesy of Exact Sciences.