Analysts have refuted Citron Research's report on Exact Science’s Cologuard which stated the product was a "seriously inferior product and a disastrous business model." Despite the report causing Exact Science's stock to drop 8 percent, analysts recommend the stock, MarketWatch reports.
Here's what you should know.
1. Exact Sciences opened May 15 at $33.77 and closed down 4 percent at $32.43.
2. Canaccord Genuity Analyst Mark Massaro refuted Citron Research, and recommended the stock.
3. Mr. Massaro took issue with Citron saying that colonoscopies are "the gold standard." He cited a U.S. Preventative Services Task Force list that said stool-based tests are a viable colon cancer screening strategy.
He said to MarketWatch, "Short reports always have some elements to truth to them. It would be wrong to say that Cologuard is the standard of care, but it would also be wrong to say that colonoscopies are. … There is no perfect test."
4. Citron argued Exact Sciences would never be profitable. Mr. Massaro predicts the company will turn a profit in the third quarter of fiscal year 2019. Citron also argued that UnitedHealth Group wouldn't cover the test. Mr. Massaro said the payer "has to" cover the test by 2018. He said the payer could be employing a negotiating tactic.
5. Citron also argued that physicians aren't prescribing Cologuard. Analysts Puneet Souda referenced increased prescription numbers refuting that claim.