Tumbling to a price of $42.25 during today's evening trading session, shares of Exact Sciences are now -49.92% below their average target price of $84.36. Does this mean the stock will reverse course? Analysts are giving EXAS an average rating of buy and target prices ranging from 66.0 to 100.0 dollars per share.
For the greater market's outlook on the stock, we can use Exact Sciences's short interest as a proxy. The short interest represents the proportion of the float's shares that are tied to short positions, meaning that the investor believes the stock will decline in the future. Here, the stock's short interest is 5.2% which means the outlook is split.
Short selling involves borrowing shares and then selling them at current market prices. In the successful version of the strategy, the shares are purchased at a lower price at some time in the future. The investor then returns the shares to the lender, and keeps the profit made on the sell/buy transaction.
One way to get an idea of the market sentiment on a stock is to check its rate of institutional ownership. In the case of Exact Sciences, institutional investors own 90.2% of the shares, which indicates they have a very high stake in the company. What does this really tell us?
Institutional investors such as hedge funds, investment firms, and wealth managers devote significant resources to identifying good investments. If they have decided to invest in EXAS, it probably means they believe it is a solid investment choice.
But it could also mean they are buying up shares in an effort to acquire the company or to get seats on the board of directors. Also bear in mind that institutions are fallible (just maybe not quite as fallible as the average retail investor), so they may simply be wrong when they think they've found a good stock.
Overall, there is mixed market sentiment towards Exact Sciences because of an analyst consensus of strong upside potential, a buy rating, an average amount of shares sold short, and a significant number of institutional investors. Investors should not base their decisions on market sentiment only, they should also be aware of a stock's fundamentals before committing.
At a glance, here are some essential statistics you may want to know about EXAS:
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It has trailing 12 month earnings per share (EPS) of $-1.31 per share
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Exact Sciences has a trailing 12 month Price to Earnings (P/E) ratio of -32.3 while the S&P 500 average is 27.65
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The company has a Price to Book (P/B) ratio of 2.48 in contrast to the S&P 500's average ratio of 4.59
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Exact Sciences is a Health Care company, and the sector average P/E and P/B ratios are 27.53 and 3.61 respectively
