Exact Sciences Surges 50% After Bullish Options Signal
On 12/7 Exact Sciences (EXAS) was our featured write-up as and shares have gained more than 50% in just 5 weeks and the January $52.5 calls highlighted are up around 400%.
“Exact Sciences (EXAS) on 12/5 saw a large buyer of 1100 January $52.50 calls for $3.80 and this follows a massive opening put seller on 11/17 for 500 January 2024 $50 ITM puts sold for $16.60 or about $850K total. EXAS also still has 3000 December $42.50 calls in open interest from buyers on 8/25 at $5.30 and the very large Jan 2024 $45 opening put sale for 3500 contracts on 8/18 for $15.40 remains in OI showing confidence in current levels holding as this bottoming base forms. Shares have been basing the last several months in the 35-50 range and now appears to be forming the right shoulder of a bullish inverted head and shoulders pattern with the neckline at 50 roughly and a measured move potentially up to 65. The stock has held up very well the past few days as the market pulls back and is forming a bull flag with a breakout trigger over 47.50 and first target a VPOC near 51.50. The weekly chart has a big volume pocket above 50 which fills in up to 65 so a decent extended target the next several months possibly. The $8.2B company trades at 4.3x sales, 2.9x book value while revenue is expected to grow +15% FY22 and +12% growth estimated in FY24. Exact is a global cancer diagnostics company. The Company provides a portfolio of products for earlier cancer detection. It offers laboratory testing services from its Cologuard colorectal cancer screening test, Oncotype DX cancer diagnostic tests and services, and COVID-19 test. Its flagship screening product, the Cologuard test, is a non-invasive, stool-based deoxyribonucleic acid (sDNA) screening test that utilizes a multi-target approach to detect DNA and hemoglobin biomarkers associated with colorectal cancer and pre-cancer. This week on 12/6 EXAS presented at the SABCS 2022 Conference and highlighted the impact of their precision oncology portfolio on breast cancer treatment. EXAS has a large portfolio of other tests being developed and is positioned to be a leader in the long term although profitability not seen until 2025 at the earliest. Average analyst target is $60. BTIG lowered their target to $65 from $70 last month but keeps a Buy rating after the strong Q3 report and showed good growth for Cologuard while demonstrating a material improvement in operating leverage. Raymond James has a Buy rating and $60 target citing the company pulled forward its EBITDA profitability goal from 2024 to Q3 of 2023 which should comfort investors. Piper boosted its target to $50 from $40 and has a Neutral rating while Credit Suisse initiated back in late August with a Outperform and $55 target stating that EXAS’ leadership position in non-invasive colorectal cancer screening is durable, while upcoming pipeline catalysts could de-risk future large opportunities like multi-cancer testing and minimal residual disease monitoring. Short interest is at 5.6%. Hedge fund ownership rose 13.9% last quarter.”