Exact Sciences Corporation (NASDAQ:EXAS) beat earnings estimates Tuesday morning, sending EXAS stock skyrocketing to orbit $17 a share for a while after closing Monday at $12.46.
Today’s gain is the icing on the cake for investors with sturdy enough spines to grab and hold EXAS stock after it plummeted from an all-time high of $25 to a low of sub-$5. Since the start of the year, Exact Sciences stock is up almost 75%.
Not a bad performance at all. Now, time to get out.
EXAS Stock Earnings Rundown
While the market was anticipating Exact Sciences to open its report today with a big ol’ loss of 55 cents, the biotech firm subverted those expectations with a loss of “just” 46 cents per share.
It didn’t stop there, either: Analysts expected sales of $18.5 million and Exact Sciences delivered $21.2 million in revenue. That’s a year-over-year gain of 161%. Not bad.
And Exact Sciences’ product, Cologuard, an FDA-approved colorectal cancer screener, completed 54,000 tests in the quarter. EXAS continues to steer the ship toward a year-end 240,000 Cologuard tests and revenue between $90 million to $100 million.
But here’s the thing: Analysts have pretty much aligned their views with that guidance in mind, and the consensus 12-month price target of $13 has been breached and then some. EXAS stock was trading at just $5.50 in May, so that 180%-plus gain should open more eyes than wallets.
Sure, a loss of 46 cents a share sounds a whole heck of a lot better than a loss of 55 cents per share, but the actual numbers are still wider than the loss from the year-ago period. And while that’s to be expected as the company takes on more operating costs, it’s beyond risky to bet on an unprofitable company with a single commercial product.
I think today is likely as good as it gets for EXAS shareholders.
Bottom Line on EXAS Stock
Look, the bottom line is that EXAS stock is a highly volatile biotech play in an environment already pockmarked by volatility.
A run-up in a highly speculative stock such as Exact Sciences isn’t just unsustainable, it’s a sign of buyout-happy investors getting ahead of themselves coupled with short sellers who’ve done the same.
Shares were sold short to the tune of some 33% of the float, and today’s earnings beat forced the hand of the wound-licking short sellers.
I’m not going down the checklist of things that have gone disastrously wrong in the stock market over the past year, but don’t make Exact Sciences stock another addition to that list. Sell now.
As of this writing, John Kilhefner did not hold a position in any of the aforementioned securities.
