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What Caused Exact Sciences Shares to Fall 19.1% in December

George Budwell, The Motley Fool
Updated

What happened

Healthcare stocks of all shapes and sizes felt the wrath of the moody market last month. For example, shares of Exact Sciences (NASDAQ: EXAS), a rapidly growing molecular diagnostic company, fell by a jaw-dropping 19.1% over the course of December, according to data from S&P Global Market Intelligence. In fact, Exact's stock was among the worst performers across the entire healthcare sector last month.

An index finger pressing a "buy now" button on a keyboard.
An index finger pressing a "buy now" button on a keyboard.

Image source: Getty Images.

So what

Why was Exact's stock in particular hit hard by this marketwide pullback? While there is no clear answer -- Exact didn't release much in the way of news in December -- the company's stately valuation may offer some clues. In short, Exact has long garnered one of the richest valuations in the healthcare sector, thanks to the promise of its novel colon-cancer test Cologuard. So it's plausible that the market simply decided to reevaluate Exact's lofty valuation, while it went through a pronounced de-risking cycle last month.

Now what

Exact's shares, though, have started to rebound in a big way early in 2019. Over the first two weeks of trading, for instance, the stock has already jumped by a noteworthy 16.2%. What's sparking this new year's rally? Exact's shares appear to be heating up in response to the broader market's sudden change of course, as well as the company's strong preliminary fourth-quarter results released last week.

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Keeping with this theme, Exact's partnership with Pfizer is reportedly helping to drive an appreciable surge in Cologuard's sales -- even though this deal wasn't inked until late August and has yet to be fully implemented. If Cologuard's commercial trajectory continues to accelerate as a result of this co-marketing campaign, Exact's shares should have little trouble reclaiming their lost ground -- perhaps making this mid-cap biotech stock a worthwhile buy this month.

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George Budwell owns shares of Pfizer. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.