Exact Sciences A 'Must-Own' Growth Stock, Goldman Sachs Says In Upgrade

Shares of EXACT Sciences Corporation EXAS, which markets the non-invasive colon cancer screener Cologuard, enjoy a premium valuation and hold further upside potential, according to Goldman Sachs.

The Analyst

Analyst Patrick Donnelly upgraded Exact Sciences from Neutral To Buy and increased the price target from $85 to $120.

The Thesis

The momentum in the commercial ramp of Cologuard justifies a premium valuation, and the combination of Cologuard catalysts and new product rollouts support appreciation from current levels — even after the 75 percent gain Exact Sciences' shares have notched since the beginning of 2018, Donnelly said in the Tuesday upgrade note. 

Cologuard's large addressable market, visibility into pricing and reimbursement and lack of near-term competitive threats provide a relatively stable backdrop, the analyst said. 

The market has yet to fully appreciate a series of updates over the course of 2018, Donnelly said. This is likely to extend the runway for "best-in-class" growth, he said. 

Investors have not attached any valuation to Exact Sciences' new products, and are looking at these, as well as product improvements, to mitigate an eventual moderation in top-line growth from Cologuard, the analyst said. 

"We view EXAS as a must-own growth stock given the clean runway forward that is largely in its control with potential for discovery value in the pipeline outside of Cologuard." 

Goldman sees the Exact Sciences story as a strengthening one, with the stock poised for outperformance going forward.

The Price Action

Exact Sciences shares were up 0.12 percent at $91.87 at the time of publication Tuesday. 

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Photo courtesy of Exact Sciences.