Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares in Exact Sciences Corporation (NASDAQ:EXAS) fell by as much as 10% today after Goldman Sachs downgraded the company's shares to neutral from a buy.
So What: Goldman cut its rating on the colon cancer testing company saying that the launch of Exact Sciences' Cologuard diagnostic test was tracking below its initial projections.
The Cologuard test won FDA approval last August to become the first FDA-approved test for colon cancer. Since its approval, however, sales have been slow to materialize. During the fourth quarter, Exact Sciences reported sales of just $1.5 million.
Goldman also took the opportunity to reduce its six month price target for Exact Sciences shares to $24 from its previous target of $29.
Now What: Cologuard should begin seeing sales climb as more payers begin reimbursing for it. That could happen this year given that the company has recently announced agreements involving members at both Aetna and Anthem. However, until those relationship translate into cold, hard profit, it's hard to get too excited about Exact Sciences. After all, the company lost $100 million last year.
Arguably, there's a big, addressable market that Cologuard can tap into. Exact Sciences reports that 23 million people over age 50 fail to get screened for colon cancer as recommended, and that means far too many people are getting diagnosed later than necessary with the cancer, which can be treated if found early. Regardless, until we start seeing sales that reflect the potential, I'm content to sit this one out.
Todd Campbell has no position in any stocks mentioned. Todd owns E.B. Capital Markets, LLC. E.B. Capital's clients may or may not have positions in the companies mentioned. The Motley Fool recommends Anthem and Goldman Sachs. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.