Waiting For The Next Overreaction With Exact Sciences

Although Exact Sciences (NASDAQ:EXAS) isn’t that old of a company, a couple general rules of thumb seem to have emerged – the company’s non-invasive Cologuard test for colorectal cancer is going to continue to gain share, and shorts are going to continue to look for any cracks in the wall as a way to keep holding on to their bearish thesis. With the company outperforming expectations in 2017 (to the tune of nearly 170% revenue growth and 70%-plus gross margins) and the share price up nearly another 150% over the past twelve months, patient longs have been well-rewarded for sticking with this up-and-coming molecular diagnostics company.

Not surprisingly, given the robust growth, these shares are trading at a pretty rich multiple today. Although more beat-and-raise performances are certainly possible, and the company has only penetrated somewhere around 3% to 4% of its addressable market, I would wait for another bad news event (likely more perceived than real) before making a big commitment to the shares.

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Waiting For The Next Overreaction With Exact Sciences