Why Exact Sciences Is Poised to Underperform

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, molecular diagnostics company Exact Sciences (NASDAQ: EXAS  ) has received a distressing two-star ranking.

With that in mind, let's take a closer look at Exact Sciences and see what CAPS investors are saying about the stock right now.

Exact Sciences facts

 

 

Headquarters (founded)

Madison, Wis. (1995)

Market Cap

$612.1 million

Industry

Biotechnology

Trailing-12-Month Revenue

$4.1 million

Management

CEO Kevin Conroy

CFO Maneesh Arora

Return on Equity (average, past 3 years)

(47.9%)

Cash/Debt

$108.1 million / $2.0 million

Competitors

CRH Medical

PreMD

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 16% of the All-Star members who have rated Exact Sciences believe the stock will underperform the S&P 500 going forward.

Earlier this week, one of those Fools, zzlangerhans, touched on the stock's seemingly unsustainable valuation:

A [$600M] market cap is way too much for unconvincing sensitivity and specificity data that don't provide a convincing basis for widespread adoption of the Cologuard test. Exact is once again a trader's football and I expect the stock to move with the winds until a concrete catalyst emerges.

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Read/Post Comments (5) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On May 03, 2013, at 5:21 PM, Troy2008 wrote:

    What a dumb "article" Pointless, factless BS.

  • Report this Comment On May 03, 2013, at 6:25 PM, Mikey925 wrote:

    Congratulations Motley Fool, you've done it again with a completely worthless article and waste of bandwidth.

    Perhaps you might want to try comparing the sensitivity of Exact's non-invasive colon cancer screening test "Cologuard" for colon cancers and pre-cancers to that of the current Fecal Immunochemical Test (FIT).... before making such completely naïve and erroneous statements as "zzlangerhans" has made in his quote above.

    His profile says that he has a background in biochemistry from Harvard and is an ER doctor. He obviously flunked molecular biology given his statement above.

    This article is a joke.

  • Report this Comment On May 04, 2013, at 5:13 PM, lntwo wrote:

    Truly the dumbest post to date on MF. The MF branding continues.

  • Report this Comment On May 06, 2013, at 7:23 PM, kirkydu wrote:

    I am one of the Caps All-stars who rates this stock an outperform. I have owned it for about 5 years now and am up around 600%. Why do I want to continue owning it? In short, the sDNA/FIT test that Exact is putting out is about 3x more effective at finding pre-cancers than the FOBT/FIT. You'll have to look those things up if you are new to colon cancer screening issues.

    Medicare wants to reduce the tens of billions in cancer treatment costs dramatically, so screening tests that might cost a few hundred dollars more, but catch pre-cancers at much higher rates, are worth their weight in something more valuable than gold. This explains why CMS is allowing concurrent approval with FDA.

    Here is a summary I wrote elsewhere: http://www.marketwatch.com/story/an-exact-opportunity-2012-0...

    I also mentioned EXAS on the Fool Blog network where I am a contributor. See Kirkydu.

    There is no doubt this is speculative as we don't definitively know the test will be approved, however, it appears likely to be approved in my opinion. If you make speculative bio-tech investments, this is one that could mimic the company that put the current Pap test on the market, which happens to have been started by the same guy as Exact.

  • Report this Comment On May 08, 2013, at 6:29 PM, Mikey925 wrote:

    Given that the "FIT" test is FDA approved and only detects cancers and pre-cancers at a sensitivity of 66% and 20% respectively, while Exact Science's Cologuard detects cancers and pre-cancers at 92% and 42% (with 2cm pre-cancers detected at 66%), I would be highly confident that the FDA will APPROVE COLOGUARD.

    It's downright mind-boggling how ignorant and uninformed some of the people are on Motley Fool that post articles like the one above.

    Sad really.

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