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EXACT Sciences Corporation (EXAS) Plunges on a Negative Federal Guideline; Analysts Fall to Sidelines

By Austin Angelo 

Yesterday, shares of EXACT Sciences Corporation (NASDAQ:EXAS) dropped 46 percent and closed at $9.98, compared to the previous day’s close of $18.53. The company plummeted after an unanticipated guideline from United States Preventative Services Task Force (USPSTF) that identified Cologuard, the company’s colorectal cancer diagnostic product, as an “alternative” screening method, while leaving the product out of a group of recommended tests. Goldman Sachs and Stephens weighed in following the announcement.

Following the announcement, Isaac Ro from Goldman Sachs maintained a Neutral rating on the biotechnology company; however, he downgraded his price target to $11, as opposed to his earlier target of $24.

Talking about the guideline, Ro said, “We previously anticipated an A or B rating for Cologuard, which would have paved a clear path for full reimbursement coverage from private insurance companies.” He added, “However, USPSTF did not offer a rating for Cologuard and instead categorized it as one of two ‘alternative’ screening strategies. We now enter a 30-day public comment period and anticipate more clarity in the months thereafter.”

Ro cut the expected EPS for the firm for FY15 from ($1.67) to ($1.68), for FY16 from ($1.04) to ($1.36), and for FY17 from $0.06 to ($0.77).

On the same day, Drew Jones from Stephens reduced his price target for Exact to $14 from $25. According to Jones, “an A/B designation from USPSTF is essential for broad coverage of Exact Sciences’ test.” While the analyst has maintained an Equal Weight rating on the stock, he noted that “this preliminary decision will now be followed by a 30-day comment period.”

As per TipRanks’ statistics, out of the eight analysts who have rated the stock in the last three months, four have rated EXAS as a Buy and four have rated it as Hold; none of the analysts have given a Sell rating to Exact Sciences. The average consensus price target for Exact Sciences is $17.13, an upside of 63% from current levels.