Exact Sciences Corporation's (NASDAQ:EXAS) Profit Outlook

With the business potentially at an important milestone, we thought we'd take a closer look at Exact Sciences Corporation's (NASDAQ:EXAS) future prospects. Exact Sciences Corporation provides cancer screening and diagnostic test products in the United States and internationally. On 31 December 2023, the US$12b market-cap company posted a loss of US$204m for its most recent financial year. The most pressing concern for investors is Exact Sciences' path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

Check out our latest analysis for Exact Sciences

Consensus from 22 of the American Biotechs analysts is that Exact Sciences is on the verge of breakeven. They anticipate the company to incur a final loss in 2024, before generating positive profits of US$6.5m in 2025. So, the company is predicted to breakeven just over a year from now. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 62%, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

earnings-per-share-growth

Underlying developments driving Exact Sciences' growth isn’t the focus of this broad overview, though, keep in mind that by and large a biotech has lumpy cash flows which are contingent on the product type and stage of development the company is in. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.

Before we wrap up, there’s one issue worth mentioning. Exact Sciences currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Exact Sciences' case is 75%. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

There are key fundamentals of Exact Sciences which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Exact Sciences, take a look at Exact Sciences' company page on Simply Wall St. We've also compiled a list of key factors you should look at:

1. Valuation: What is Exact Sciences worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Exact Sciences is currently mispriced by the market.

2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Exact Sciences’s board and the CEO’s background.

3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.