Is Exact Sciences Ready for a Rebound After Recent Share Price Surge?

If you have been tracking Exact Sciences, you are probably wondering whether the market is finally waking up to its potential or just second guessing old assumptions. With a sharp 5.6% gain in the past week and a solid 7.3% move over the last month, there is no doubt this stock's momentum is perking up, even as questions remain about where it will settle next. The year-to-date gain of 1.4% might seem modest, but it stands in stark contrast to the -15.8% dip over the past year, revealing just how sensitive Exact Sciences has been to changing investor sentiment and larger market developments.

Looking further back, the roller coaster is clear. The stock has surged by 79.6% over three years, only to be offset by a -46.1% slide across five years. Such swings hint at shifting perceptions around risk and reward as new technologies and evolving market factors make investors regularly reassess what this company is worth. Interestingly, Exact Sciences passes 5 out of 6 valuation checks, giving it an impressive value score of 5, which is a quick flag that it could be significantly undervalued by several traditional standards.

But numbers on their own rarely tell the full story. Valuation can be approached from many angles, and while Exact Sciences looks attractive through most classic lenses, there is an even more telling way to size up its future potential. Let us dive into the key valuation approaches, with a look ahead to a smarter, more holistic view at the end.

Why Exact Sciences is lagging behind its peers

Approach 1: Exact Sciences Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates a company’s intrinsic value by projecting future free cash flows and discounting them back to today’s dollars. For Exact Sciences, this involves forecasting how much cash the business will generate over time and evaluating what that stream is worth in the present. This provides a forward-looking sense of value beyond current earnings or market mood.

Currently, Exact Sciences’ Free Cash Flow stands at $136.68 million. Projections indicate this figure will increase substantially over the coming years and reach $1.78 billion by 2035, with notable increases along the way. While near-term analyst forecasts cover only a handful of years, long-term figures are extrapolated, highlighting sustained confidence in the company’s trajectory. For instance, by 2026, free cash flow is projected at $261.46 million and expected to grow to $1.04 billion by 2030. This signals expectations of robust scaling in the decade ahead.

Given these future cash flows, the DCF analysis points to an intrinsic value of $154.83 per share. With the current trading price reflecting a 62.7% discount to this valuation, the implication is that Exact Sciences stock is significantly undervalued according to this approach.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Exact Sciences.

Our Discounted Cash Flow (DCF) analysis suggests Exact Sciences is undervalued by 62.7%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Exact Sciences Price vs Sales

For companies like Exact Sciences, which may not be consistently profitable yet but are generating substantial revenue growth, the Price-to-Sales (P/S) ratio is a particularly useful valuation metric. Unlike earnings-based multiples, P/S tells investors how much they are paying for each dollar of revenue. This makes it a reliable tool when rapid scaling or reinvestment phases distort short-term profits.

It is important to note that a "normal" or "fair" valuation multiple can vary considerably based on growth prospects and risk. Rapidly expanding companies or those with lower risk profiles often trade at higher multiples because investors anticipate future gains. In contrast, riskier or slow-growth businesses typically warrant lower ratios.

Exact Sciences is currently trading at a P/S multiple of 3.72x. This is noticeably below both the industry average of 10.19x and the peer group average of 6.32x. This suggests the market values its sales less generously than similar companies. However, Simply Wall St’s proprietary "Fair Ratio" for Exact Sciences is 5.96x. This figure takes into account not just industry benchmarks, but also factors like the company’s earnings growth, profit margin, market capitalization, and specific risks. The Fair Ratio is designed to provide a more complete and individualized benchmark than standard peer or industry comparisons.

Since the company’s actual P/S of 3.72x is well below the Fair Ratio of 5.96x, it appears the stock is undervalued using this approach.

Result: UNDERVALUED

PS ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Exact Sciences Narrative

Earlier, we mentioned there is an even better way to understand valuation. Let us introduce you to Narratives. A Narrative is simply your own story for a company, describing how you see its business, opportunities, risks, and future. This approach is connected directly to clear assumptions for future revenue, profit margins, and what you think is fair value.

On Simply Wall St’s Community page, millions of investors use Narratives to bridge each company’s strategy and real-world developments with dynamic, personalized forecasts and valuations. Narratives help you decide when to buy or sell by comparing your Fair Value to the latest market Price. They are automatically updated as new information, such as breaking news or earnings, arrives.

Perspectives can be very different: for Exact Sciences, some investors believe strong Medicare and commercial coverage, rising screening rates, and new test launches could mean the fair value is over $80 per share. Others highlight product concentration and competitive risks, viewing fair value closer to $50. Seeing these Narratives side by side gives you a smarter, more flexible way to make investment decisions that actually reflect your own view of the company’s future.

Do you think there's more to the story for Exact Sciences? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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