What To Expect From Exact Sciences' Pending Q2 Release

Previewing EXACT Sciences Corporation EXAS's second-quarter results, Canaccord Genuity said it expects the company to deliver another strong quarter, extending its strong commercial momentum. The firm indicated that the company remains one of its top picks for 2017.

Strong Commercial Traction

Specifically, analyst Mark Massaro said it expects a "beat-and-raise quarter" given his view that the set up in the second half looks beatable. Citing his expectation for strong commercial traction, the analyst raised his second-quarter tests completed estimate to 117,000 from 108,000. With the Street expecting a 120,000–125,000-mark, the analyst feels an achievement of 130,000 would mean a blowout performance (see Massaro's track record here).

The analyst noted that his 2017 volume estimate of 485,000 is above the guidance of 470,000+.

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Expectations For Other Q2 Metrics

• Revenues: $51.6 million, up from the prior estimate of $49 million vs. consensus of $49.7 million.
• Loss per share: $0.34 vs. consensus loss estimate of $0.35.
• Operating expenditure: $70.5 million.
• Revenue/test: $441.
• Cost of goods sold per test: $172.
• New prescribing clinicians: 9,500 Vs 10,000 in Q1.
• Gross margin: 61 percent vs. consensus of 60.8 percent.
• Patient compliance rate: 65 percent vs. 67 percent in Q1.

If EXACT Sciences manage to beat second-quarter volumes by 5,000+ test, Canaccord Genuity believes the company would raise its 2017 guidance. The expectation is premised on the set up looking achievable, benefit to ordering doctors as a result of the addition of UnitedHealth Group Inc UNH and Aetna Inc AET, traction from new sales reps and modest Cologuard reordering in the fourth quarter.

The firm listed the following as the focus of the second-quarter earnings call:

• The impact of new payor coverage decisions and contracts.
• Pacing/update on new sales rep adds.
• Doctor re-order rates.
• Early read on efficacy of new 30-second ad.
• Update on lab expansion.
• Timing of any data readouts with respect to liquid biopsies.
• Plan to drive Cologuard re-ordering in the fourth quarter as well as 2018 and beyond.

As such, Canaccord Genuity maintains its Buy rating on the shares of the company and raised its price target from $38 to $42.