Canaccord Analysts Toured Exact Sciences' Mega-Lab; Firm Reiterates Buy

In a report published Friday, Canaccord Genuity analyst Mark Massaro maintained a Buy rating on

, with a price target of $32, following the company's Analyst Day. EXACT Sciences pre-announced Q2 completed tests of 21K, ahead of Canaccord Genuity's forecast of 18,662. The company also recorded a patient compliance rate of 73 percent, above the 71 percent estimate. "The company's recent use of $10 gift cards (introduced a few weeks ago) as incentives could help lift compliance above 73%." analyst Mark Massaro said. In the report Canaccord Genuity noted, "We came away with a greater appreciation for the company's access to talent, particularly the Mayo Clinic and Dr. David Ahlquist, whose presentation on the pancreatic test stood out to us given the test's data in the 90s. While it's too early for EXAS to determine a regulatory pathway, we are encouraged it may choose to launch a lab-developed test (LDT) for pancreatic cancer, which would allow EXAS to hit the market as early as 2017 (our initial estimate) and add another source of revenue besides Cologuard." Having toured EXACT Sciences' 30K-sq.-foot lab, Mark Massaro wrote that it was a "solid operation" and that the company has the space "to scale its capacity beyond 1M tests, if needed." The revenue estimate for Q2 has been raised from $7.7M to $8.6M, to reflect the Q2 volume guidance. The EPS estimates for 2015 and 2016 have been reduced from $(1.55) to $(1.63) and from $(0.99) to $(1.09), respectively, to reflect higher S&M spend.