Exact Sciences rose Friday after the Food and Drug Administration approved its next-generation colon cancer detection test, Cologuard Plus.
The test uses stool, collected at home or a doctor's office, to screen for markers of colorectal cancer in people age 45 and older.
In the test that secured its approval, Cologuard Plus had a sensitivity of 95% and specificity of 94% in people with average risk of having colon cancer. Sensitivity is a test's ability to correctly identify someone with the disease. Specificity shows the test's ability to rule out people without the disease.
Cologuard Plus also showed 43% sensitivity for finding advanced precancerous lesions. Doctors can remove lesions before they develop into cancer.
In early trades, Exact Sciences stock rose 1.9% to 67.67. Shares have trended higher since June, though remain far from their record high at 159.54 in January 2021, MarketSurge shows. Still, the stock is above both its 50-day and 200-day moving averages.
Investors could view the Exact Sciences chart as a deep, six-month cup-with-handle base with a 171.95 buy point.
Pricing Visibility Bolsters Exact Sciences Stock
Evercore ISI analyst Vijay Kumar noted the approval timing was in line with expectations.
Exact Sciences is now clear to seek Medicare reimbursement on the Advanced Diagnostic Laboratory Tests pathway. Tests must have FDA approval — vs. the lower bar of clearance — to seek reimbursement on the ADLT pathway.
Kumar expects the company to ask for a higher price for Cologuard Plus, which will further help Exact Sciences stock.
"Given today's update, we would expect Exact Sciences shares to rebound on pricing visibility for fiscal year 2025," he said in a report.
He also noted the company tested Cologuard Plus in people age 40 and older. Current guidelines are for colon cancer screening to begin at age 45 in the U.S. The Preventative Services Taskforce is likely to update its guidelines in 2027. If it lowers the age bar for colon cancer screening, that could add about 20 million people to Cologuard's market, representing a $3 billion opportunity.
Kumar has an outperform rating and 80 price target on Exact Sciences stock.
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
