Goldman says Guardant selloff, Exact Science rally an overreaction

Goldman Sachs analyst Matthew Sykes lowered the firm’s price target on Exact Sciences (EXAS) to $65 from $70 and keeps a Buy rating on the shares. Following Guardant Health’s (GH) pivotal ECLIPSE data evaluating a liquid biopsy blood-based test for the detection of colorectal cancer a competitor to Exact Sciences’ Cologuard test, Exact shares were up over 20% and Guardant shares were down 40%, Sykes tells investors in a research note. The analyst sees this as an overreaction for both stocks, saying market share shifts "tend to be more gradual over time, shaped by technology, ease of use, and commercial effectiveness." Key to determining the share shift within colorectal cancer diagnostics will be how doctors’ ultimately weigh the benefit of Shield’s better adherence versus Cologuard’s higher sensitivity, writes Sykes. He believes Cologuard’s penetration in the market, coupled with continued commercial execution will help drive Cologuard growth in the near term. However, pending Shield’s FDA approval and Centers for Medicare and Medicaid Services decision, liquid biopsy screening in colorectal cancer has arrived and will start to make an impact on the competitive landscape, he adds. Sykes dropped Exact’s price target not in connection with the ECLIPSE readout, but to better reflect the guidance issued on its Q3 earnings call.