What happened
After the company reported strong third-quarter results, shares of Exact Sciences (EXAS 0.04%), a company focused on noninvasive cancer detection, soared 12% as of 11:26 a.m. EDT on Wednesday.
So what
Here's a review of the numbers from the period:
- Revenue grew 63% to $118.3 million. That result was about 8% higher than Wall Street was expecting.
- Gross margin expanded 320 basis points to 75% on the sales gains and a higher revenue per test.
- Net loss was $45.4 million, or $0.37 per share. On an adjusted basis, the loss was $0.43 per share. That was better than the $0.37 loss that Wall Street was expecting.
- Management raised full-year revenue guidance to a range of $435 million to $440 million.
Image source: Getty Images.
Wall Street applauded the broad-based prosperity.
Now what
Exact Sciences is on a roll. There's no doubt at this point that its cancer-detection test Cologuard is having a lot of commercial success. Since the opportunity ahead of the company is huge, it is understandable that traders are feeling bullish today.
The key question facing investors now is whether it makes sense to pay 25 times sales to get their hands on a piece of this business. My opinion is that the opportunity ahead is large enough and the company's growth rates are fast enough to justify opening up a small position today. However, there could be considerable downside ahead if the company fails to deliver on its lofty expectations, so investors should proceed with caution.
