On Tuesday, Exagen Inc . (NASDAQ:XGN), a diagnostics company, received a reiterated Sector Weight rating from KeyBanc. The reiteration comes in the wake of the company's mixed third-quarter results for 2024, which were impacted by one-time adjustments affecting revenue. Despite these adjustments, the analyst from KeyBanc pointed out the improving financial profile of Exagen as a key area of focus for investors.
During the earnings call, Exagen's management emphasized their expectation for the company to achieve cash flow positivity by the end of 2025. They also forecasted gross margins to be in the low to mid-60% range. Contributing to these optimistic projections is the anticipated launch of the company's enhanced AVISE tests, which include new biomarkers. These tests are not only expected to be gross margin accretive but also poised to expand Exagen's reach into the rheumatoid arthritis segment of the connective tissue disease market.
However, Exagen faces a significant financial obligation with $21.4 million in required debt payments due in 2026. Management has indicated plans to address this debt within the next 12 to 15 months, signaling a proactive approach to the company's financial strategy.
In response to the recent financial disclosures and management's updated guidance, KeyBanc has released a revised model for Exagen. This model reflects the third-quarter results of 2024 and incorporates the latest expectations set forth by the company's leadership. The reaffirmed Sector Weight rating suggests that the analyst views Exagen's stock as in line with the overall performance of the sector, without any particular under or overvaluation at this time.
InvestingPro Insights
Recent data from InvestingPro sheds additional light on Exagen Inc.'s financial situation and market performance. The company's market capitalization stands at $47.64 million, reflecting its current position in the diagnostics sector. Exagen has shown impressive momentum, with a significant 104.83% price return over the past year and a notable 89.17% return in the last six months.
InvestingPro Tips highlight that Exagen operates with a moderate level of debt, which aligns with the company's plans to address its $21.4 million debt obligation in the near future. Additionally, the tip indicating that liquid assets exceed short-term obligations suggests a relatively stable short-term financial position, despite the upcoming debt payments.
It's worth noting that while Exagen has not been profitable over the last twelve months, with a negative P/E ratio of -2.75, four analysts have revised their earnings upwards for the upcoming period. This could potentially reflect optimism about the company's future performance, possibly tied to the anticipated launch of enhanced AVISE tests and the projected improvement in gross margins.
For investors seeking a more comprehensive analysis, InvestingPro offers 5 additional tips for Exagen Inc., providing a deeper understanding of the company's financial health and market position.
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