Exact Sciences stock collapsed Wednesday — undercutting its 50-day and 200-day lines — after the Cologuard maker reported light third-quarter sales and cut its full-year outlook.
The company tried to make a pitch that "not all is broken with this long-term growth story," William Blair analyst Andrew Brackmann said in a report. But Brackmann isn't convinced.
"Without sugarcoating it, there is not a lot that we believe can really change the narrative in the ultra near-term," he said. "Investors will want to see signs of execution improvement and a re-acceleration in revenue growth into 2025."
On today's stock market, Exact Sciences stock plummeted 23.5% to close at 54.72. Shares hit their lowest point since late July, and closed below their key moving averages.
Exact Sciences Stock Dives On 'Alarming' Cut
Overall, sales increased 13% to $709 million. But that missed FactSet-polled analysts' consensus forecast for $716.8 million. The company lost 21 cents per share, worsening from no earnings in the year-earlier period. Analysts projected a 20-cent loss.
Screening revenue — which includes sales of its stool-based colon cancer test, Cologuard — rose 15% to $545 million. Sales from its precision oncology business edged 5% higher to $164 million. Both segments came in about 1% below expectations, Brackmann said.
But the "alarming" part of the report was Exact Sciences' guidance cut. The company now expects full-year sales to come in at $2.73 billion to $2.75 billion, down from its previous call for $2.81 billion to $2.85 billion.
"This is the first time since 2021 that management guided revenue lower (that instance was largely pandemic related) and there is no doubt that credibility will take a hit," he said. "It will also put shares in a difficult position for at least a few months as the team executes and rebuilds confidence that revenue growth can reaccelerate from here."
Brackmann, though, kept his outperform rating on Exact Sciences stock.
Hurricanes Impact Third-Quarter Orders
Evercore ISI analyst Vijay Kumar says Exact Sciences faces several issues during the third quarter.
A slower seasonal step-up in physician order rates — some tied to hurricanes on the East Coast — led to the guidance cut.
"Historically, order rates saw the steepest ramp between early August and late October, which did not occur in the 2024 season," he said. "Management noted execution issues stemming from historical decisions as a factor and was taking corrective steps to fix it."
Notably, the 2024 guidance cut implies analysts will need to take their fourth-quarter expectations down about 11%, he said.
Kumar rates Exact Sciences stock an outperform with an 80 price target.
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
