A month has gone by since the last earnings report for Exact Sciences (EXAS). Shares have lost about 25.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Exact Sciences due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Exact Sciences' Q2 Earnings Beat, Margin Declines
Exact Sciences incurred loss per share of 58 cents for second-quarter 2020 compared with loss of 30 cents in the year-ago period. However, the reported loss was narrower than the Zacks Consensus Estimate of a loss of 62 cents per share.
Revenues in Detail
Following the completion of the Genomic Health business integration, second-quarter consolidated revenues were $268.9 million, up 34.5% year over year. The metric exceeded the Zacks Consensus Estimate by 17.1%.
Screening revenues were $131.3 million, reflecting a year-over-year decrease of 34%. Precision Oncology revenues were $103 million.
In the quarter under review, Exact Sciences’ gross profit (excluding the amortization of acquired intangibles) rose 28.4% to $190.9 million. However, gross margin contracted 338 basis points (bps) to 71% on a 52.3% surge in total cost.
Research and development expenses rose 9% year over year to $32.7 million. Sales and marketing expenses rose 34.8% to $118.8 million. General and administrative expenses increased 67.4% to $106.7 million year over year.
Adjusted operating expenses were $258.2 million in the second quarter, up 41.9% year over year. Adjusted operating loss totaled $67.2 million compared with the year-ago operating loss of $33.1 million.
Exact Sciences exited the second quarter of 2020 with cash and cash equivalents of $703.9 million compared with $701.1 million at the end of 2019.
Exact Sciences noted that the recent rise in COVID-19 infections has slowed the pace of recovery in its business. Hence, this time too, it has refrained from providing 2020 guidance.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -78.88% due to these changes.
Currently, Exact Sciences has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Exact Sciences has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.