Why Exact Sciences, A10 Networks, and 3D Systems Slumped Today

Find out which of these companies could face new competition.

Dan Caplinger
Dan Caplinger
Jan 17, 2018 at 4:30PM
Health Care

The stock market surged on Wednesday as investors followed the familiar playbook of buying on even the most modest of dips. After closing lower Tuesday, major benchmarks soared 1% or more, setting records and reaching new milestone levels. Earnings season continued to go favorably, and market participants foresee a huge number of positive reports from companies that stand to benefit from new lower corporate rates and other business tailwinds. Yet a few outliers still suffered from downbeat news that sent their share prices lower. Exact Sciences (NASDAQ:EXAS), A10 Networks (NYSE:ATEN), and 3D Systems (NYSE:DDD) were among the worst performers on the day. Here's why they did so poorly.

Is Exact Sciences' moat going, going, gone?

Shares of Exact Sciences fell 10% on news that there might be a potential competing technology that could successfully test for colon cancer, challenging the current dominance of Exact's Cologuard test. An announcement from the American Society for Clinical Oncology said that use of a procedure known as a liquid biopsy might successfully detect colorectal cancer in its early stages. An industry symposium this weekend will provide more information regarding the potential rival test, but shareholders chose to panic despite analyst assertions that even if the findings of the study prove accurate, it will take years for a test based on liquid biopsy technology to make it through the approval process and threaten Cologuard's sales.

Cologuard test materials, including instructions, sample storage unit, and shipment box.

Image source: Exact Sciences.

A10 fails to connect

A10 Networks stock dropped 13.5% after the networking company announced its preliminary figures for the fourth quarter, some of which were well below its previous guidance. A10 expects revenue for the quarter to be about 15% less than originally predicted, with the company pointing to weak demand in North America for the shortfall. Nevertheless, A10's profit expectations proved to be more accurate, with current calls for $0.05 to $0.06 per share in adjusted earnings falling squarely in the upper half of what it had previously projected. Until customers are willing to spend more aggressively on network technology, A10 and its industry peers are likely to see further pressure ahead.

New venture can't lift 3D Systems

Finally, shares of 3D Systems closed lower by nearly 8%. The 3D-printing specialist failed to build excitement among investors about its new exclusive distribution partnership with medical device giant Stryker for their virtual surgical planning (VSP) suite. VSP has been cleared by the U.S. Food and Drug Administration for use in helping surgeons personalize their treatment of patients through medical imaging, surgical simulations, and 3D printing. Despite the news, investors still fear that 3D Systems won't be able to pull out of its tailspin, especially given that the company withdrew its full-year guidance after a downbeat report last quarter.