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Exelixis Stock Surges 25% in a Month: Time to Buy or Sell?
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Shares of Exelixis, Inc. (EXEL - Free Report) have surged 25% in a month against the industry’s decline of 4.9%. The stock has also outperformed the sector and the S&P 500 Index in this timeframe.
The outperformance can be attributed to better-than-expected third-quarter results. The company also raised its annual guidance.
Exelixis has been a consistent outperformer of late on the back of the strong performance of its lead drug Cabometyx and encouraging pipeline progress.
EXEL Outperforms Industry, Sector & S&P 500
Image Source: Zacks Investment Research
Strong Q3 Results Boost EXEL
Exelixis recorded earnings of 47 cents per share, which beat the Zacks Consensus Estimate of 42 cents. The company registered adjusted earnings of 10 cents per share in the third quarter of 2023. The upside was mainly driven by higher revenues and lower operating expenses.
Net revenues were $539.5 million, which easily beat the Zacks Consensus Estimate of $491 million. The top line surged 14.3% year over year.
Cabometyx (cabozantinib) generated revenues of $475.7 million, which beat both the Zacks Consensus Estimate of $439 million and our model estimate of $434.6 million. The drug is approved for advanced renal cell carcinoma (RCC) and previously treated hepatocellular carcinoma.
Cabometyx maintained its status as the leading tyrosine kinase inhibitor (TKI) for the treatment of RCC. This is mainly attributable to its use in combination with Opdivo in the first-line setting. The drug also maintained growth in the hepatocellular carcinoma indication.
Management is also focused on the label expansion of Cabometyx. The FDA accepted EXEL’s supplemental new drug application (sNDA) for cabozantinib for patients with previously treated advanced pancreatic neuroendocrine tumors (pNET) and those with previously treated advanced extra-pancreatic NET (epNET). It also assigned a standard review with a target action date of April 3, 2025, and granted the orphan drug designation to cabozantinib for the treatment of pNET.
A potential label expansion should further propel its growth prospects.
Exelixis also intends to submit an sNDA with the FDA later this year for cabozantinib, in combination with Tecentriq (atezolizumab), for metastatic castration-resistant prostate cancer.
EXEL Raises 2024 Revenue Guidance
Total revenues are projected to be between $2.150 billion and $2.2 billion (previous guidance: $1.975-$2.075 billion). Product revenues are estimated to be in the band of $1.775-$1.825 billion (previous guidance: $1.65-$1.75 billion).
EXEL Strives Hard to Develop Other Pipeline Candidates
The pipeline progress has also been impressive, as Exelixis looks to expand its oncology portfolio beyond Cabometyx.
Another promising candidate in Exelixis’ pipeline is zanzalintinib, a next-generation oral. Enrollment has been completed in the late-stage STELLAR-303 study evaluating zanzalintinib, in combination with Tecentriq, compared with regorafenib in patients with metastatic refractory colorectal cancer that is not microsatellite instability-high or mismatch repair-deficient. Preliminary results from the study are expected in 2025.
Exelixis recently collaborated with pharma giant Merck (MRK - Free Report) to evaluate zanzalintinib in combination with Merck’s blockbuster anti-PD-1 therapy Keytruda (pembrolizumab) in a late-stage study for treating patients with head and neck squamous cell carcinoma (HNSCC).
Both the companies will also evaluate zanzalintinib with Merck’s oral hypoxia-inducible factor-2 alpha (HIF-2α) inhibitor Welireg (belzutifan) in a phase I/II study and two phase III studies for the treatment of patients with RCC.
Per the terms of the agreement, Merck will supply Keytruda for the ongoing, Exelixis-sponsored phase III STELLAR-305 study in previously untreated PD-L1 positive recurrent or metastatic HNSCC.
The successful development of additional drugs should broaden its portfolio and reduce its dependence on its lead drug, Cabometyx.
Exelixis’ Efforts to Boost Shareholder Value
The company is also making efforts to increase shareholder value through repurchases. At the end of the second quarter, Exelixis completed its 2024 share repurchase program, having repurchased 20.3 million shares of the company’s common stock for a total of $450 million.
The board of directors has authorized the repurchase of up to an additional $500 million of the company’s common stock through the end of 2025. This is the third stock repurchase program undertaken by Exelixis since March 2023.
Valuation & Estimates
Going by the price/sales ratio, EXEL’s shares currently trade at 4.66x forward sales, higher than its mean of 3.44x and the biotech industry’s 1.71x.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for 2024 earnings per share (EPS) has increased to $1.93 from $1.83 over the past 30 days. EPS estimates for 2025 have jumped 13 cents to $2 in this timeframe.
Image Source: Zacks Investment Research
Conclusion
Large biotech companies are generally considered safe havens for investors interested in this sector. EXEL is a good stock to buy now, with good fundamentals and growth prospects.
The stock has performed well this year. Potential label expansion of Cabometyx should boost its growth. The company’s efforts to expand its portfolio are also encouraging. The successful development of additional drugs should broaden its portfolio and reduce its dependence on its lead drug, Cabometyx.
In the past 60 days, estimates for Spero Therapeutics’ 2024 loss per share have narrowed from $1.59 to $1.13. Estimates for 2025 loss per share have narrowed from $1.54 to 54 cenrs.
Spero Therapeutics’ earnings beat estimates in two of the trailing four quarters and missed the mark on the other two occasions, delivering an average surprise of 94.42%.
In the past 60 days, estimates for Castle Biosciences’ 2024 loss per share have narrowed from 58 cents to 8 cents. Loss per share estimates for 2025 have narrowed from $2.13 to $1.88 during the same time frame. Year to date, shares of CSTL have surged 38.1%.
CSTL’s earnings beat estimates in each of the trailing four quarters, the average surprise being 172.72%.
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Exelixis Stock Surges 25% in a Month: Time to Buy or Sell?
Shares of Exelixis, Inc. (EXEL - Free Report) have surged 25% in a month against the industry’s decline of 4.9%. The stock has also outperformed the sector and the S&P 500 Index in this timeframe.
The outperformance can be attributed to better-than-expected third-quarter results. The company also raised its annual guidance.
Exelixis has been a consistent outperformer of late on the back of the strong performance of its lead drug Cabometyx and encouraging pipeline progress.
EXEL Outperforms Industry, Sector & S&P 500
Image Source: Zacks Investment Research
Strong Q3 Results Boost EXEL
Exelixis recorded earnings of 47 cents per share, which beat the Zacks Consensus Estimate of 42 cents. The company registered adjusted earnings of 10 cents per share in the third quarter of 2023. The upside was mainly driven by higher revenues and lower operating expenses.
Net revenues were $539.5 million, which easily beat the Zacks Consensus Estimate of $491 million. The top line surged 14.3% year over year.
Cabometyx (cabozantinib) generated revenues of $475.7 million, which beat both the Zacks Consensus Estimate of $439 million and our model estimate of $434.6 million. The drug is approved for advanced renal cell carcinoma (RCC) and previously treated hepatocellular carcinoma.
Cabometyx maintained its status as the leading tyrosine kinase inhibitor (TKI) for the treatment of RCC. This is mainly attributable to its use in combination with Opdivo in the first-line setting. The drug also maintained growth in the hepatocellular carcinoma indication.
Management is also focused on the label expansion of Cabometyx. The FDA accepted EXEL’s supplemental new drug application (sNDA) for cabozantinib for patients with previously treated advanced pancreatic neuroendocrine tumors (pNET) and those with previously treated advanced extra-pancreatic NET (epNET). It also assigned a standard review with a target action date of April 3, 2025, and granted the orphan drug designation to cabozantinib for the treatment of pNET.
A potential label expansion should further propel its growth prospects.
Exelixis also intends to submit an sNDA with the FDA later this year for cabozantinib, in combination with Tecentriq (atezolizumab), for metastatic castration-resistant prostate cancer.
EXEL Raises 2024 Revenue Guidance
Total revenues are projected to be between $2.150 billion and $2.2 billion (previous guidance: $1.975-$2.075 billion). Product revenues are estimated to be in the band of $1.775-$1.825 billion (previous guidance: $1.65-$1.75 billion).
EXEL Strives Hard to Develop Other Pipeline Candidates
The pipeline progress has also been impressive, as Exelixis looks to expand its oncology portfolio beyond Cabometyx.
Another promising candidate in Exelixis’ pipeline is zanzalintinib, a next-generation oral. Enrollment has been completed in the late-stage STELLAR-303 study evaluating zanzalintinib, in combination with Tecentriq, compared with regorafenib in patients with metastatic refractory colorectal cancer that is not microsatellite instability-high or mismatch repair-deficient. Preliminary results from the study are expected in 2025.
Exelixis recently collaborated with pharma giant Merck (MRK - Free Report) to evaluate zanzalintinib in combination with Merck’s blockbuster anti-PD-1 therapy Keytruda (pembrolizumab) in a late-stage study for treating patients with head and neck squamous cell carcinoma (HNSCC).
Both the companies will also evaluate zanzalintinib with Merck’s oral hypoxia-inducible factor-2 alpha (HIF-2α) inhibitor Welireg (belzutifan) in a phase I/II study and two phase III studies for the treatment of patients with RCC.
Per the terms of the agreement, Merck will supply Keytruda for the ongoing, Exelixis-sponsored phase III STELLAR-305 study in previously untreated PD-L1 positive recurrent or metastatic HNSCC.
The successful development of additional drugs should broaden its portfolio and reduce its dependence on its lead drug, Cabometyx.
Exelixis’ Efforts to Boost Shareholder Value
The company is also making efforts to increase shareholder value through repurchases. At the end of the second quarter, Exelixis completed its 2024 share repurchase program, having repurchased 20.3 million shares of the company’s common stock for a total of $450 million.
The board of directors has authorized the repurchase of up to an additional $500 million of the company’s common stock through the end of 2025. This is the third stock repurchase program undertaken by Exelixis since March 2023.
Valuation & Estimates
Going by the price/sales ratio, EXEL’s shares currently trade at 4.66x forward sales, higher than its mean of 3.44x and the biotech industry’s 1.71x.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for 2024 earnings per share (EPS) has increased to $1.93 from $1.83 over the past 30 days. EPS estimates for 2025 have jumped 13 cents to $2 in this timeframe.
Image Source: Zacks Investment Research
Conclusion
Large biotech companies are generally considered safe havens for investors interested in this sector. EXEL is a good stock to buy now, with good fundamentals and growth prospects.
The stock has performed well this year. Potential label expansion of Cabometyx should boost its growth. The company’s efforts to expand its portfolio are also encouraging. The successful development of additional drugs should broaden its portfolio and reduce its dependence on its lead drug, Cabometyx.
Zacks Rank & Other Key Picks
EXEL currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the biotech sector are biotech sector are Spero Therapeutics (SPRO - Free Report) and Castle Biosciences, Inc. (CSTL - Free Report) , both carrying a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 60 days, estimates for Spero Therapeutics’ 2024 loss per share have narrowed from $1.59 to $1.13. Estimates for 2025 loss per share have narrowed from $1.54 to 54 cenrs.
Spero Therapeutics’ earnings beat estimates in two of the trailing four quarters and missed the mark on the other two occasions, delivering an average surprise of 94.42%.
In the past 60 days, estimates for Castle Biosciences’ 2024 loss per share have narrowed from 58 cents to 8 cents. Loss per share estimates for 2025 have narrowed from $2.13 to $1.88 during the same time frame. Year to date, shares of CSTL have surged 38.1%.
CSTL’s earnings beat estimates in each of the trailing four quarters, the average surprise being 172.72%.