NEW YORK (TheStreet) -- The shares of Exact Sciences  (EXAS) are tumbling 40% after regulators issued preliminary guidelines identifying the company's main product, a stool test for colon cancer called Cologuard, as "an alternative screening test" that can be used in "select clinical circumstances." Two analysts differed on the stock's outlook following the news, with Jefferies recommending that investors buy the shares and another research firm, Benchmark, downgrading the stock to Hold from Buy.

WHAT'S NEW: The U.S. Preventive Services Task Force, or USPSTF, named Cologuard an alternative screening test, the company announced today. When the agency previously evaluated colon cancer screening tests in 2008, it gave Cologuard an I rating, meaning that there was insufficient evidence to recommend the test.

BULLISH TAKE: The impact of the USPSTF's decision is "unclear," and could cause insurers to provide "slower and lower" reimbursement payments for the product, Jefferies analyst Brandon Couillard wrote earlier today in a research note. Nevertheless, the decline in the stock is overdone, as insurers covering 55% of Exact Sciences' target population have already agreed to cover the test. Although it's unclear whether the remaining insurers will legally have to cover Cologuard in the wake of the USPSTF's decision, Exact will still be able to persuade additional insurers to cover the test, Couillard believes. However, he indicated that he thinks that the company may have to lower its $500 price for the test. The analyst recommended buying the stock in morning trading, however. With 27% of the outstanding shares sold short, Couillard expects short covering, or the buying of shares investors with short positions need to do in order to close out their positions, will provide support for the stock.

BEARISH TAKE: Calling yesterday's developments "bad news," Benchmark analyst Jan Wald cut his rating on EXACT Sciences to Hold from Buy. The USPSTF raised concerns that the use of Cologuard could lead to "invasive follow-up testing" in individuals who are concerned about their abnormal DNA results but are not at risk of colon cancer, the analyst stated. Exact Sciences "may have a significant amount of work to do" to convince the regulators that its test provides benefits, according to Wald, who cut his price target for Exact shares to $11 from $34.

PRICE ACTION: In morning trading, Exact plunged 41% to $10.95.

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