Exact Sciences (NASDAQ:EXAS) Corporation earned a price target raise from Canaccord Genuity (TSX:CF, LSE:CF) after the molecular diagnostics company specializing in the detection of early-stage cancers reported its first quarter results.
The analysts upped their price target from US$75 to US$92 and repeated their ‘Buy’ rating on the stock. Exact shares are currently trading at US$79.
“We have raised our price target to reflect higher near- and long-term revenue and profitability assumptions in their 10-year discounted cash flow model,” they wrote in a note to clients.
“We reiterate our ‘Buy’ rating, as EXAS shares offer over 15% upside potential to our revised price target.”
The analysts wrote that Exact’s first quarter results, reported after the market close on May 9, were ahead of their estimates and the FactSet consensus, and also compared favorably to the company’s guidance.
Revenue was $602.5 million, which was up 24% year-over-year, including $443.2 million in screening revenue, which was up 45% over the year-ago quarter.
Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) was $45.9 million with a 7.6% margin, which the analysts noted as “impressive” given Exact had indicated that 1Q would likely be its lowest margin quarter in 2023.
“Overall, we believe EXAS had a very strong quarter,” they wrote.
They noted that these solid results were driven by the continued volume growth of its stool DNA test for colorectal cancer Cologuard, with revenue from this product increasing 45-50% year-over-year.
While Exact’s 1Q was “impressive,” the analysts wrote that the company’s quarterly revenue and adjusted EBITDA could be flat or decline throughout the remainder of 2023. They pointed out that, with a solid quarter in hand, Exact had raised its 2023 revenue guidance.
“We believe the updated outlook is achievable given the company's strong screening momentum (especially Cologuard) and new products in the precision oncology segment,” they said.
“We believe the company is nicely positioned for a solid year in which Exact's attractive fundamentals should be on full display amid key data readouts for important pipeline products.”
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