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Why Is Exact Sciences (EXAS) Up 2.5% Since Last Earnings Report?

A month has gone by since the last earnings report for Exact Sciences (EXAS). Shares have added about 2.5% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Exact Sciences due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Exact Sciences Q3 Earnings Beat, Gross Margin Rises

Exact Sciences reported breakeven earnings per share for third-quarter 2023, a significant improvement from the year-ago loss of 84 cents per share as well as the Zacks Consensus Estimate of a loss of 49 cents.

Revenues in Detail

Third-quarter consolidated revenues were $628.3 million, up 20.1% year over year. The metric exceeded the Zacks Consensus Estimate by 2.2%.

Segments in Detail

Screening revenues, including laboratory service revenues from Cologuard, PreventionGenetics and immaterial revenues from Biomatrica products, were $472 million. The figure increased 31% year over year.

The upside can be primarily attributed to broad-based momentum in Cologuard adoption, which was fueled by commercial productivity and strong relationships with payers and providers.

Precision Oncology revenues, including laboratory service revenues from global Oncotype products and therapy selection products, were $156.3 million, up 3% year over year and up 5% on a core basis. Growth was led by Oncotype DX, which expanded 14% globally.

The company did not recognize any revenues from COVID-19 testing in the third quarter against $10.9 million in the year-ago period.

Margins

In the quarter under review, Exact Sciences’ gross profit (excluding the amortization of acquired intangibles) rose 22.6% to $459.8 million. The gross margin expanded 146 basis points (bps) to 73.2%.

Research and development expenses rose 22.7% year over year to $111.4 million. Sales and marketing expenses fell 7.7% to $173.2 million. General and administrative expenses rose 13.2% year over year to $217.4 million.

Adjusted operating expenses were $501.9 million in the third quarter, up 6.7% year over year. Adjusted operating loss totaled $42.2 million, narrower than the year-ago operating loss of $95.3 million.

Financial Update

Exact Sciences exited the third quarter of 2023 with cash and cash equivalents and marketable securities of $733.4 million compared with $604.4 million at the end of the second quarter of 2023.

The company had no long-term debt on its balance sheet at the end of the third quarter.

2023 View

The company raised its 2023 revenue guidance to $2.476-$2.486 billion (from the earlier-provided range of $2.441-$2.466 billion). The Zacks Consensus Estimate for the same is pegged at $2.26 billion.

For 2023, the company now expects its Screening revenues in the range of $1.820-$1.835 billion. The company expects Precision Oncology revenues in the range of $615-$625 million.

COVID-19 testing revenues are expected to be $6 million.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended upward during the past month.

VGM Scores

Currently, Exact Sciences has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Exact Sciences has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.

Performance of an Industry Player

Exact Sciences is part of the Zacks Medical - Biomedical and Genetics industry. Over the past month, Repligen (RGEN), a stock from the same industry, has gained 15.2%. The company reported its results for the quarter ended September 2023 more than a month ago.

Repligen reported revenues of $141.19 million in the last reported quarter, representing a year-over-year change of -29.7%. EPS of $0.23 for the same period compares with $0.77 a year ago.

Repligen is expected to post earnings of $0.34 per share for the current quarter, representing a year-over-year change of -50%. Over the last 30 days, the Zacks Consensus Estimate has changed -9.9%.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Repligen. Also, the stock has a VGM Score of F.

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