Exact Sciences stock crumbled Thursday — extending its losses this week — on its growing rivalry with Guardant Health and Natera in colon cancer screening.
Despite a promising preliminary report, Exact stock tumbled 5.7% to 50.48 on the stock market today. Shares have fallen 11% this week. Exact stock is consolidating with a buy point at 72.83, according to MarketSurge.
"What is going on?" Evercore ISI analyst Vijay Kumar said in a client report.
As it turns out, there are multiple "headline risks" facing Exact Sciences stock, William Blair analyst Andrew Brackmann said in a note.
Competitor Concerns
Exact Sciences makes Cologuard, a stool-based test that screens for colorectal cancer. Last summer, the Food and Drug Administration approved rival Guardant Health's blood test for colon cancer screening. Recently, Natera published promising results for its blood test.
Investors are concerned the American Cancer Society will include Guardant Health's blood-borne screening tool Shield in its screening guidelines in 2025, Brackmann said. Today, the ACS recommends people age 45 and older with an average risk of developing colon cancer undergo regular screening through either a stool-based test or a colonoscopy.
"On the competitor front, we think fears are overdone," Brackmann said. "ACS guidelines are a nice-to-have, but will not immediately change the trajectory of uptake, in our view."
Natera Data Is Early
Further, the Natera data remain early. Natera will need to run a study with at least 20,000 to 25,000 samples, requiring the company to spend hundreds of millions of dollars, Evercore's Kumar said.
"This seems like it's 3 years away and seems silly to us if EXAS shares are under pressure because of this," he said.
Notably, Exact Sciences is also working on its own blood-based test for colorectal cancer screening. It's important to note, experts expect blood tests to be less accurate than stool-based screeners.
But Kumar predicts Exact's blood test will come out ahead of its rivals when it comes to identifying advanced adenomas. When these early-stage polyps are identified, they can be removed before they become cancerous tumors.
Natera is a holding on Cathie Wood's ARK Innovation exchange-traded fund. Shares have a strong IBD Digital Relative Strength Rating of 96 out of a best-possible 99. This means Natera stock ranks in the top 4% of all stocks when it comes to 12-month performance.
Exact Sciences stock has a low RS Rating of 19.
Analysts Upbeat On Exact Sciences Stock
William Blair's Brackmann noted Exact Sciences is also facing pressure as the Supreme Court considers a case requiring insurers to cover services included in the U.S. Preventative Services Taskforce grade A and B recommendations. This includes Cologuard.
"This indeed could be an overhang for companies with guideline-included tests that are reimbursed," he said. "We are seeking more diligence here, but for now see avenues around this for Cologuard and the impact having more of an effect on new tests not included in the guidelines."
Brackmann kept his outperform rating on Exact Sciences stock.
Similarly, Evercore's Kumar rates Exact stock an outperform with a 70 price target.
He notes there will be moving parts in 2025. But he still expects 10% screening growth in the first half of the year and mid-teens for the second half.
"The 2H ramp seems reasonable to us and visibility is high given drivers are re-screens, care-gap and pricing," he said. "EXAS noted that it is seeing early signs of commercial execution improvements … which along with upcoming blood and [minimum residual disease] data, stock at ~$50 seems very compelling to us."
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