Exact Sciences EXAS continues to be impacted by escalating expenses and fierce competition.
Exact Sciences has been grappling with escalated expenses for a while. Deteriorating international trade stemming from complex geopolitical environments across the globe is leading to a tough situation related to raw material and labor costs as well as freight charges. The stock carries a Zacks Rank #4 (Sell) currently.
Further, the continuous rise in interest rates through 2023 with no news from the Fed of a rate cut till May 2024 has put the medical device R&D space in a tight spot. All these are creating significant pressure on the company’s profitability.
In the first quarter of 2024, Exact Sciences’ research and development expenses rose 15.9% year over year to $110.6 million. Sales and marketing expenses increased 2.9% to $192.4 million. General and administrative expenses rose 11.9% year over year to $243.1 million. The escalating costs are putting significant pressure on the company’s bottom line.
Further, given the large market for colorectal cancer screening, Exact Science faces numerous competitors, some of which possess significantly greater financial and other resources and development capabilities than the company.
Exact Sciences Corporation Price
Exact Sciences Corporation price | Exact Sciences Corporation Quote
Currently, the company is aware of at least 13 companies — Epigenomics AG, EDP Biotech Corporation, Freenome Inc., GRAIL, Inc., CellMax, Inc., Volition Diagnostics, Cambridge Epigenetix Limited, Nucleix Ltd., Singlera Genomics, DiaCarta, Genomictree, Bioprognos, and PapGene, Inc. — that have developed or are developing liquid biopsy tests for the detection of colorectal cancer.
On a positive note, the company is confident about capturing at least 40% of the U.S. colorectal cancer screening market, banking on strong sales teams, a partnership with Pfizer, an innovative marketing campaign and deep payer relationships providing a powerful commercial organization to support Cologuard's growth.
Exact Sciences is currently working on building the best digital infrastructure and diagnostics. During the first quarter, Exact Sciences advanced its purpose of helping to eradicate cancer by further embedding Cologuard as the standard of care, increasing the adoption of Oncotype DX internationally and deepening its relationships with health systems, payers and patients. Highlights from the first quarter include testing more than 1 million people globally for cancer and rare diseases.
Exact Sciences is expanding its global reach, which presents prospects for future expansion throughout its extensive range of examinations. The company plans to introduce a number of novel tests in the next 18 months that will revolutionize the way cancer is identified, tracked, and managed while also contributing to the rapid expansion of EXAS.
Key Picks
Some better-ranked stocks from the broader medical space are Medpace MEDP, ResMed RMD and Encompass Health Corporation EHC.
Medpace, sporting a Zacks Rank #1 (Strong Buy), reported first-quarter 2024 earnings per share (EPS) of $3.20, which beat the Zacks Consensus Estimate by 30.6%. Revenues of $511 million improved 17.7% from last year’s comparable figure. You can see the complete list of today’s Zacks #1 Rank stocks here.
Medpace has an estimated 2024 earnings growth rate of 26.5% compared with the industry’s 12.3%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average being 12.8%.
ResMed, carrying a Zacks Rank #2 (/Buy), reported first-quarter 2024 EPS of $2.13, which topped the Zacks Consensus Estimate by 10.9%. Revenues of $1.20 billion surpassed the Zacks Consensus Estimate by 1.9%.
RMD has an estimated fiscal 2024 earnings growth rate of 17.9% compared with the industry’s 15.7%. In the trailing four quarters, the company delivered an average earnings surprise of 2.8%.
Encompass Health, carrying a Zacks Rank #2, reported first-quarter 2024 adjusted EPS of $1.12, which surpassed the Zacks Consensus Estimate by 20.4%. Net operating revenues of $1.3 billion topped the Zacks Consensus Estimate by 3.6%.
EHC has an estimated long-term earnings growth rate of 15.6% compared with the industry’s 11.7% growth. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 18.7%.
5 Stocks Set to Double
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Exact Sciences Corporation (EXAS) : Free Stock Analysis Report
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Encompass Health Corporation (EHC) : Free Stock Analysis Report
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