30% Upside: Exact Sciences Institutional Call Today at 1pm ET $EXAS

Takeaway: Join us for a review of our EXAS Long thesis today on why we think shares have 30% upside.

Please contact sales@hedgeye.com for further information.  An invite with dial-in instructions will be sent to subscribers ahead of the conference call.

estimates too low; short interest to fuel +30% UPSIDE

We are hosting a call today at 1:00PM ET to review our Exact Sciences (EXAS) Long thesis. With short interest still elevated at 30.6% we see significant upside heading into 2017 as consensus sales estimates are too low at $163.2M which implies a massive deceleration in either provider adds, tests per provider or ASP. We have developed a reliable tool to gain visibility into EXAS's provider count and will be watching this tracker closely over the next few months.

 

30% Upside: Exact Sciences Institutional Call Today at 1pm ET $EXAS - Sensitivity Table

 

With a series of clinician and former executive interviews, combined with data from the National Ambulatory Medical Care Survey (NAMCS) we gained new insights into the colon cancer screening market and Cologuard's role in it, which stand in contrast to the short seller narrative.  We'll review our addressable market analysis that estimates Cologuard's potential annual test volume to be 2.7M, or 2.0M for the commercially insured population and 0.7M for Medicare. We will also review EXAS provider adoption model and provide our thoughts on the bigger questions around payor contracts and dormant physician accounts. We see +30% upside in the near term, but also believe we have visibility into an opportunity to pivot short when growth starts to slow.

 

30% Upside: Exact Sciences Institutional Call Today at 1pm ET $EXAS - exas short interest 2 16 17

 

30% Upside: Exact Sciences Institutional Call Today at 1pm ET $EXAS - 11111111111111

key TOPICS

  • Addressable market analysis including state level detail on provider adoption and number of tests
  • Screening vs. Non-Screening colonoscopy market analysis
  • Medicare's past growth and why commercial insurance will drive EXAS future
  • Dormant vs Active Providers
  • Consensus numbers and why they're too low
  • Review of short case and the current short interest level

Thoughts into the (Pre-Announced) print

On January 8th Exact Sciences reported preliminary revenues for 2016 of $99-$99.5M implying 4Q16 revenues of $34.9-$35.4M. EXAS is scheduled to report 4Q16 and full-year 2016 results on Tuesday, February 21st. For 4Q16 and full-year 2016 we are expecting EPS of ($0.38) and ($1.68) compared to consensus of ($0.39) and ($1.69). For the fourth quarter we are modeling COGS at $178 per test and expect to see Sales and Marketing expense of $32.8M due to higher television ad campaign spend.

 

 

CLICK HERE FOR OUR 4Q16 PRE-ANNOUNCEMENT NOTE