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Why Exact Sciences Is Soaring Today

By Brian Feroldi – Updated Apr 27, 2018 at 1:05PM

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Traders cheer after the company reports expectation-smashing results.

What happened

After reporting strong first-quarter results, shares of Exact Sciences (EXAS -1.14%), a cancer-focused diagnostics company, jumped 13% as of 12:30 p.m. EDT on Friday.

So what

Here's a look at the headline numbers from the quarter:

  • Revenue jumped 87% to $90.3 million. That blew past the $87 million in revenue that Wall Street had predicted.
  • Testing volume jumped 87% year over year to 186,000. That was ahead of management's guidance range.
  • 9,000 new prescribers ordered a Cologuard test during the quarter.
  • Average cost per test fell 28% to $123. 
  • Net loss was $39.4 million, or $0.33 per share. That was lower than the $0.37 loss that analysts were expecting. 
  • Cash balance at quarter end was $1 billion. 

Management also reaffirmed that it expects revenue in 2018 to land between $420 million and $430 million. 

Given the better-than-expected results, it isn't hard to figure out why traders are feeling giddy.

Businessman Giving two thumbs up

Image source: Getty Images.

Now what

These quarterly results reaffirm that Exact Sciences remains in hypergrowth mode. With a huge market opportunity ahead, shareholders should expect this company's top line to move higher at a breakneck pace for the foreseeable future. 

But are shares a buy at today's egregious valuation? That's a tough call, but my view is that the opportunity here is large enough to justify a small purchase. However, this remains a speculative stock that has its fair share of detractors, so potential investors should brace themselves for extreme volatility.

Brian Feroldi has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Exact Sciences Corporation Stock Quote
Exact Sciences Corporation
EXAS
$31.97 (-1.14%) $0.37

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