Mizuho Reiterates Buy On Exact Sciences, Expects Positive Outcomes On Two Coming Decisions

In a report published Tuesday, Mizuho analyst Peter Lawson reiterated a Buy rating and price target of $35 on EXACT Sciences Corporation EXAS. Two announcements, expected in Fall, are expected to drive Cologuard adoption further. The analyst expects the USPSTF draft guidance and the CMS/CPT code cross-walking announcements to be positive. "The Cologuard launch is progressing smoothly and we have insight into next quarter with 3Q test guidance previously announced," analyst Lawson stated. The company reported its 2Q15 results, with operating expenses marginally above the estimates and gross margins meaningfully beating expectations. With the USPSTF colon cancer screening draft guidance expected in 3Q15, the analyst believes that an "A" or "B" rating for Cologuard would lead to mandatory private insurance coverage, as well as inclusion of Cologuard in quality programs for rating health plans and physicians. The analyst also believes that a "B-" rating is unlikely and would make it difficult for the company to drive the use of Cologuard, especially among larger health systems. "We also expect a decision from CMS on the cross-walking of Cologuard's G-code to a CPT code from the AMA, which would likely increase in the ease of collecting reimbursement and enhance uptake. We expect the crosswalk to be implemented at current pricing," the Mizuho report said.