Exact Sciences (EXAS) closed the last trading session at $59.11, gaining 3.7% over the past four weeks. While this performance is noteworthy, the real excitement lies in the potential for further gains, according to Wall Street analysts. The average price target set by analysts sits at $79.40, suggesting a substantial 34.3% upside potential. This average is calculated from 20 short-term price targets ranging from a low of $61 to a high of $100.
While the lowest estimate indicates a modest 3.2% increase from the current price, the most optimistic estimate points to a significant 69.2% upside. However, it’s crucial to consider the standard deviation of these estimates, which measures their variability. A smaller standard deviation implies greater agreement among analysts. In this case, the standard deviation is $9.54, suggesting a moderate level of agreement.
While the consensus price target is a popular metric for investors, it’s essential to avoid placing sole reliance on it. The accuracy and impartiality of analyst price targets have long been debated. Analysts’ business incentives can sometimes lead to overly optimistic predictions.
For EXAS, the impressive average price target isn’t the only indicator of potential upside. The strong agreement among analysts regarding the company’s ability to exceed previous earnings estimates provides further support for this view. While a positive trend in earnings estimate revisions doesn’t directly predict the magnitude of stock gains, it has proven to be a powerful indicator of potential upside.
Researchers have discovered that price targets are often misleading, frequently diverging from actual stock movements. This is because analysts, despite their deep understanding of company fundamentals, often set overly optimistic price targets. This practice aims to generate interest in companies that their firms have business relationships with or seek to associate with.
However, a tight clustering of price targets, indicated by a low standard deviation, suggests a high degree of agreement among analysts about the direction and magnitude of a stock’s price movement. While this doesn’t guarantee the stock will reach the average price target, it can serve as a starting point for further research into potential fundamental drivers.
Investors should avoid making investment decisions solely based on price targets. Treat them with skepticism and use them as a starting point for further investigation.
What fuels analyst optimism about EXAS? The growing consensus among analysts in revising EPS estimates higher suggests strong confidence in the company’s earnings prospects. This upward trend in earnings estimate revisions is a significant indicator of potential upside, as research has shown a strong correlation between such trends and near-term stock price movements.
The Zacks Consensus Estimate for the current year has increased by 5% over the past month, with one positive estimate revision and no negative revisions. Moreover, EXAS currently holds a Zacks Rank #2 (Buy), placing it among the top 20% of over 4,000 stocks ranked based on earnings estimates. This ranking, backed by a robust track record, further reinforces the stock’s potential upside in the near term.
While the consensus price target might not be a reliable indicator of the exact extent of EXAS’s gains, the direction of price movement it implies appears to be a credible guide. As always, thorough research and a well-defined investment strategy are essential for making informed decisions.
