There's little question that the surest path to long-term wealth generation is investing in the best companies and holding them for years, if not decades. That said (and as many found out over the past year or so), investing isn't for the faint-hearted. The Nasdaq Composite (^IXIC 0.10%) has been in a bear market for nearly 18 months now, and the tech-centric index is still down 23%.
Yet history is clear: Every bear market has been followed by a bull market. Experienced investors know that if they keep their heads and continue to invest in top-notch companies through the downturn, profits await when the market inevitably recovers. Calling the bottom is notoriously difficult, so the best time to buy is now.
In fact, analysts are remarkably bullish about the prospects of one beaten-down growth stock. And if Wall Street is right, this stock is set to soar 164% over the next several years.
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This cancer-screening pioneer has fallen on hard times
Few words can have a more devastating effect and instill more fear than "cancer." Yet advances in technology have led to earlier detection, which in turn dramatically increases survival rates.
Exact Sciences (EXAS -0.46%) is helping to answer the call. The biotech company's growing roster of cancer screening tests have increased in popularity with doctors and patients, helping fuel dramatic stock price gains. The market downturn has been a cruel mistress, and the stock remains 49% off its high, but for patient investors, the tide appears to be turning.
The company's leading noninvasive diagnostic test, Cologuard, remains a frontline favorite. The in-home test has cumulatively screened more than 10 million people for colon cancer. And a recent change to Medicare and insurance policies could fuel further gains.
When patients receive a positive Cologuard test result, which suggests cancer might be present, Medicare and most commercial insurers will now pay for a colonoscopy without any extra cost to the patient.
Exact Sciences is also deep in clinical trials for the next-generation test, Cologuard 2.0. Preliminary data suggests the new test is more accurate and cuts down on false negatives. The company expects pivotal trial results early this year.
While Cologuard remains the company's cash cow, it's only the beginning. Exact Sciences has been expanding its lineup and now has a long pipeline of multi-cancer early detection (MCED) screening tests. These search for signs of multiple types of cancer simultaneously -- all with a simple blood test.
Earlier this year, Exact Sciences launched the OncoExTra therapy selection test, which provides a comprehensive DNA and RNA analysis -- along with a complete molecular profile of the cancer cells. This results in actionable information that doctors can use to create a customized treatment plan for a patient.
Lastly, recent results suggest the company is getting back on track. For the first quarter, Exact Sciences reported revenue grew 24% year over year, while its loss per share of $0.42 improved by 60%. Perhaps even more important to investors was news that the company plans to be cash-flow positive this year.
Wall Street is overwhelmingly bullish on Exact Sciences
Most on Wall Street believe the sell-off is misguided. Of the 13 analysts that cover Exact Sciences, eight rate it a buy or strong buy and not a single one recommends selling.
Cathie Wood's Ark Investment Management is even more optimistic than its Wall Street peers. The firm has crunched the numbers and expects Exact Sciences stock to hit $139 by 2027. This represents potential gains of 77% compared to Wednesday's closing price.
And that's just the beginning. Ark's bull case is much more robust, seeing the stock soaring to $208 by 2027, representing upside of 164%.
Helping backstop Ark's bullish thesis is the company's enormous opportunity. Simon Barnett, Ark's director of life sciences research, wrote:
Cancer care is a vast, underserved, durable, and secularly growing market that is likely to consolidate. Exact is one of few companies that have the sales and IT infrastructure to support another multi-year period of growth. Its experienced and trained sales force is an important competitive advantage.
To be clear, the stock isn't cheap in terms of traditional valuation metrics, but at just five times next year's sales, the price is extremely reasonable compared to its opportunity.
With the company's multiple catalysts to fuel its rebound, a reasonable stock price, and a strong endorsement from Wall Street, now is likely a great time to buy Exact Sciences in advance of a robust recovery to come.
