We recently compiled a list of the 9 Best Gene Therapy Stocks to Buy Now and in this article, we discuss whether Exact Sciences Corporation (NASDAQ:EXAS) is the gene therapy stock with the greatest potential.
Gene therapy involves treating illnesses by modifying, replacing, or supplementing faulty or missing genes responsible for a disease. This approach has become a research focus area in fighting degenerative illnesses. The growing incidence of cancer and other chronic diseases worldwide is increasing the demand for gene therapy.
In 2023, the global gene therapy market reached a valuation of $7.74 billion. The market is expected to expand at a compound annual growth rate (CAGR) of 19.6% to reach a value of $38.76 billion by 2032. In 2022, North America led the global gene therapy market in terms of revenue and is expected to maintain this dominance throughout the forecast period. This leadership can be credited to the strong regulatory framework for developing cellular treatments and the presence of many biopharmaceutical companies in the region.
Meanwhile, Europe is expected to offer the most opportunities for growth in the gene therapy market in the coming years. Some factors driving this growth include advanced healthcare infrastructure and the availability of reimbursements across the continent.
As far as the vector types are concerned, the viral vector segment dominated the market in 2022 by capturing over 85% of the revenue share. This was due to advancements in physiochemical methods for gene therapies during preclinical and clinical trials aimed at treating various diseases. As these developments continue, the viral vector segment is projected to experience rapid growth in the following years.
Cathie Wood’s Confidence in Gene Therapy
The gene editing market has now gained mainstream attention and is attracting many famous investors. A prominent hedge fund investor, Cathie Wood, has shown strong confidence in this industry. Wood has been actively investing in innovative gene editing companies for many years.
Investors are becoming increasingly familiar with the term “CRISPR” – Clustered Regularly Interspaced Short Palindromic Repeats – as the industry sees an increase in companies using CRISPR-based technologies. According to a report by Cathie Wood’s ARK Invest, CRISPR can be considered the “breakthrough of the century.”
ARK Invest expects that CRISPR technology will soon show its potential in the agriculture sector and offer opportunities to improve the food supply. Meanwhile, in the field of medicine, CRISPR technology’s potential market for treating monogenic diseases is estimated at over $75 billion annually.
A biotechnologist in a white lab coat manipulating genes in a laboratory.
Our Methodology
To shortlist the best gene therapy stocks, we analyzed Insider Monkey’s database of 919 hedge funds as of Q1 2024. From this extensive dataset, we selected gene therapy companies that received significant interest from hedge fund investors. Our aim was to identify gene therapy stocks that hedge funds are particularly optimistic about. Furthermore, we looked at companies with strong product pipelines, positive analyst ratings, and high price targets to shortlist the most promising gene therapy stocks. The best gene therapy stocks have been ranked in ascending order of the number of hedge fund investors as of the first quarter of 2024.
“Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).”
Is Exact Sciences Corporation (NASDAQ:EXAS) the Gene Therapy Stock with the Greatest Potential?
Exact Sciences Corporation (NASDAQ:EXAS)
Number of Hedge Fund Holders: 48
Exact Sciences Corporation (NASDAQ:EXAS), headquartered in Madison, Wisconsin, specializes in molecular diagnostics, particularly in the detection of early-stage cancers. Exact Sciences Corporation (NASDAQ:EXAS) is among the top 5 best gene therapy stocks to buy now.
One of the company’s main products is Cologuard, a non-invasive test that uses stool-based DNA screening to identify biomarkers linked to colorectal cancer and pre-cancer.
In the first quarter of 2024, Exact Sciences Corporation (NASDAQ:EXAS) recorded revenue of $638 million, marking a 6% growth on a reported and core revenue basis. Meanwhile, screening revenue saw a 7% increase, reaching $475 million.
The average price target for Exact Sciences Corporation (NASDAQ:EXAS) is $82, as per the projections of 13 analysts from Wall Street over the past 3 months. Among these, the highest price target is $100, while the lowest forecast stands at $51. On average, this implies an 81.2% upside from the current stock price of $45.25.
Here’s what Artisan Partners said about Exact Sciences Corporation (NASDAQ:EXAS) in its Q1 2024 investor letter:
“Among our top detractors were Atlassian, ON Semiconductor and Exact Sciences Corporation (NASDAQ:EXAS). Exact Sciences is a leading provider of diagnostic testing and a maker of the noninvasive colorectal cancer screening test Cologuard. The company reported another solid quarter with revenues growing 18% and, importantly, screening (Cologuard) revenues growing 21%. However, growing optimism around a competing blood-based test has led to competitive fears among investors and corresponding performance weakness. Our view has been that blood tests, while potentially more convenient, have historically been unable to match the accuracy of stool testing (especially when it comes to detecting early cancers). Shortly after the quarter entered, new blood test data from a private competitor (Freenome) supported our views. Its test demonstrated 79% sensitivity for detecting colorectal cancer versus Cologuard 2.0’s 94% sensitivity.”
Overall, Exact Sciences Corporation (NASDAQ:EXAS) ranks 5th among the 9 best gene therapy stocks to buy now. You can visit 9 Best Gene Therapy Stocks to Buy Now to see the other gene therapy companies that are on the hedge fund radar.
While we acknowledge the potential of gene editing companies, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure. None. This article is originally published on Insider Monkey.