Exact Sciences Shares Higher After Q3 Beat And Raise

Analysts at Bank of America turned incrementally bullish on EXACT Sciences Corporation (NASDAQ: EXAS) after the company reported a clean beat and raise quarter. The firm's Anne Edelstein maintains a Buy rating on Exact Sciences' stock with a price target boosted from $56 to $58.

Exact Sciences' third-quarter earnings report was sufficiently "convincing" to reaffirm the bullish case as Cologuard volume rose 135 percent year over year and 19 percent quarter over quarter to 161,000 tests, the analyst said in a research report. This figure was "well ahead" of the Street's estimate of 153,000 tests and driven by increased new doctor orders and re-orders from doctors already in the system.

In addition, the company's fiscal 2017 test guide revision of 20,000 to the upside appears conservative as it implies just 175,000 tests would be completed in the fourth quarter. Encouragingly, the company also raised its long-term penetration guide from 30 percent to 40 percent, which amounts to 10 million to 11 million tests per year over time.

Finally, the cancer diagnosis and detecting company boosted its gross margin rate in the third quarter by an "impressive" 15 basis points year over year to 71 percent, which exceeded the Street's estimate of 66 percent. This was due to a 28 percent decline in cost of goods sold per test from a year ago to $129.

Bottom line, despite the stock's strong performance the company's growth profile remains favorable with the ultimate outcome of achieving a peak gross margin rate of 80 percent. As such, the stock's price implies a favorable risk to reward profile.

At publication, shares of Exact were up 12.51 percent at $56.37.

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