Exagen Inc. (XGN): A Bull Case Theory

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We came across a bullish thesis on Exagen Inc. on Valueinvestorsclub.com by inflection99. In this article, we will summarize the bulls’ thesis on XGN. Exagen Inc.'s share was trading at $7.00 as of July 16^th.

Exagen (XGN) is a molecular diagnostics company specializing in autoimmune diseases like lupus and rheumatoid arthritis, primarily serving rheumatologists with its proprietary AVISE® test suite. Its flagship product, AVISE CTD, offers superior diagnostic capabilities versus the standard of care, combining multiple tests with enhanced sensitivity and specificity, reducing diagnosis time, hospitalizations, and repeat testing.

The autoimmune diagnostics market is large, underserved, and economically attractive to all stakeholders—patients, providers, and payers—due to better outcomes, cost savings, and improved practice efficiency. This favorable market backdrop is amplified by the emergence of novel lupus therapies, increasing pharma's incentive to partner with diagnostics players like Exagen. The company holds key advantages through its proprietary biomarkers, unique reimbursement code, and growing coverage with Medicare and commercial payers.

Recent innovations, such as new T-cell markers and early kidney disease detection, support pricing power, gross margin expansion, and potential biopharma revenue. Led by CEO John Aballi—who previously executed a similar playbook at Decipher before selling to Veracyte—Exagen has transformed from a cash-burning operation to near breakeven, with revenue acceleration, ASP tailwinds, and profitability expected by Q4 2025.

Strategic interest is also plausible; Labcorp recently highlighted autoimmune disease as a priority area, positioning Exagen as a potential acquisition target. With minimal sell-side coverage, recent capital raises, and multiple upcoming catalysts—including improved reimbursement, guideline inclusion, and biopharma partnerships—Exagen is poised for a re-rating. Applying a conservative 4.5x 2026E revenue multiple implies 2.5–3x upside from current levels, while downside appears limited given the business’s turnaround, strategic value, and current low-end peer valuation.

Previously, we covered a bullish thesis on Oscar Health, Inc. (OSCR) by Oguz Erkan in May 2025, which highlighted the company’s tech-driven platform, margin improvement, and expansion opportunity in ACA markets. The company’s stock price has appreciated by approximately 21.62% since our coverage. This is because the thesis played out. Inflection99 shares a similar view on Exagen but emphasizes its autoimmune diagnostics advantage.

Exagen Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 8 hedge fund portfolios held XGN at the end of the first quarter which was 7 in the previous quarter. While we acknowledge the potential of XGN as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.