Why Investors Are Paying a Premium for EXACT Sciences Corporation

EXACT Sciences Corporation (NASDAQ: EXAS) operates in an industry famous for cutthroat competition that strangles profitability. In this context, the stock's 300% run-up to a nosebleed-inducing valuation this year seems ludicrous.

To see why investors are willing to pay an immense premium for a diagnostics stock, let's begin with the enormous potential for its Cologuard brand.

Over the past several quarters, Exact Sciences has thrilled investors by surpassing its own lofty sales growth targets. During the three months ended September, the company completed 136% more Cologuard tests than in the same period last year.

Source: Fool.com