In the fast-growing biotechnology sector, driven by advances in gene editing, personalized medicine, and artificial intelligence, companies are racing to develop new treatments for an aging population and the increasing demand for healthcare. Among the innovators in this space, Exelixis, Inc. (EXEL) is gaining significant attention, and for good reason.
Exelixis is zeroing in on difficult-to-treat cancers armed with a clinically differentiated pipeline of small molecules, antibody-drug conjugates (ADCs), and other biotherapeutics. The company leverages cutting-edge science, strategic collaborations, and significant investments to broaden its reach across various tumor types.
EXEL delivered exceptional results in its fiscal third quarter, surpassing analyst expectations while demonstrating the strength of its cancer-focused portfolio. The company’s flagship product, CABOMETYX®, continues to make waves alongside promising treatments like Zanzalintinib, XB010, and XL495. With many of these therapies still in trial phases or awaiting FDA approvals, EXEL is relentlessly working to improve treatment options.
In terms of price performance, the stock has returned 17.4% in the past three months, while over the past year, it rose by an impressive 47.9%, closing the last trading session at $32.73.
As we look ahead, 2025 could be a defining year for Exelixis. With a robust pipeline and an ongoing push for innovation, this company is on track for more clinical and regulatory milestones. But is EXEL a biotech stock worth adding to your portfolio?
Let’s explore the factors that could shape the company’s performance in the near future.
A Robust Pipeline Beyond Cabometyx
Exelixis isn’t resting on its laurels with the success of CABOMETYX®. The company is aggressively expanding its oncology portfolio with promising candidates like zanzalintinib, a next-generation oral tyrosine kinase inhibitor (TKI). This drug is being tested in the STELLAR-303 study, where it’s combined with Tecentriq to treat advanced colorectal cancer. With enrollment now complete, early results from this pivotal trial are anticipated in 2025, potentially opening new doors for treatment options in a challenging cancer type.
Adding to its momentum, EXEL recently partnered with pharmaceutical heavyweight Merck & Co., Inc. (MRK) to explore zanzalintinib’s potential combined with MRK’s blockbuster PD-1 therapy Keytruda (pembrolizumab). This collaboration spans several studies, including a late-stage trial for head and neck squamous cell carcinoma (HNSCC) and a phase I/II trial using Merck’s hypoxia-inducible factor-2 alpha (HIF-2α) inhibitor, Welireg, for renal cell carcinoma (RCC).
By diversifying its pipeline, EXEL is reducing its reliance on CABOMETYX® and aiming for long-term growth. These efforts could pave the way for a new wave of therapies that improve outcomes for cancer patients worldwide.
Robust Financials and Upbeat Guidance
During the third quarter that ended September 30, 2024, EXEL’s total revenue increased 14.3% year-over-year to $539.54 million. Its income from operations income came in at $136.07 million compared to a year-ago loss of $17.58 million.
In addition, the company’s non-GAAP net income amounted to $135.66 million or $0.47 per share, reflecting a considerable improvement from $32.09 million or $0.10 per share, respectively, recorded in the same period last year.
Recently, the company announced its preliminary unaudited financial results for the fiscal year 2024, provided financial guidance for the fiscal year 2025, and delivered an update on its business. Total revenues are projected to be between $2.15 billion and $2.25 billion (previous guidance: $1.975-$2.075 billion). Net product revenues are estimated to be in the band of $1.95-$1.2.05 billion (previous guidance: $1.65-$1.75 billion).
Solid Historical Growth
EXEL’s revenue and EBITDA have grown at respective CAGRs of 18.4% and 45% over the past three years. The company’s EBIT has increased 46.3% over the same timeframe, while its net income and EPS have improved at CAGRs of 41.7% and 44.8%, respectively.
Also, the company’s total assets and levered free cash flow have grown at CAGRs of 6.5% and 25.6% over the past three years, respectively.
Favorable Analyst Estimates
Analysts expect EXEL’s EPS for the fourth quarter (ended December 2024) to increase 56.7% year-over-year to $0.42. Its revenue for the same quarter is expected to come in at $558.60 million, reflecting a growth of 16.5% from the prior year. Furthermore, the company has surpassed the consensus EPS and revenue estimates in three of the trailing four quarters, which is promising.
Additionally, Street expects the company’s revenue and EPS for the fiscal year (ending December 2025) to increase 3.6% and 8.6% year-over-year to $2.23 billion and $1.89, respectively.
High Profitability
EXEL’s trailing-12-month gross profit margin of 96.25% is 65.9% higher than the respective industry average of 58%. Its trailing-12-month EBIT margin of 29.22% is significantly higher than the industry average of 2.39%.
Furthermore, the stock’s trailing-12-month net income, ROCE, and ROTA of 22.43%, 20.20%, and 15.77% favorably compare to the negative industry averages of 4.61%, 40.27%, and 26.01%, respectively. Similarly, its trailing-12-month levered FCF margin of 20.72% is considerably higher than the industry average of 2.50%.
POWR Ratings Reflect Promise
EXEL’s robust prospects are reflected in its POWR Ratings. The stock has an overall rating of A, translating to a Strong Buy in our proprietary system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
Our proprietary rating system also evaluates each stock based on eight distinct categories. EXEL has an A grade for Value and Quality, which is in sync with its lower-than-industry valuations and robust profitability, respectively.
Also, the stock has a B grade for Growth, consistent with its strong financial performance and historical growth.
Among the 333 stocks in the Biotech industry, EXEL is ranked #3. Beyond what I have stated above, we have also given EXEL grades for Momentum, Sentiment, and Stability. Get access to all the EXEL ratings here.
Bottom Line
EXEL reported better-than-expected financial results for the third quarter. Analysts appear bullish about the company’s growth prospects, driven by robust demand for its quality and diverse product offerings, expanding pipeline, strategic collaborations, and strong market position. Also, its growing revenue and gross profit margin depict solid financial health.
Given EXEL’s solid financials, accelerating profitability, and promising growth outlook, this stock could be an ideal buy now.
How Does Exelixis, Inc. (EXEL) Stack Up Against Its Peers?
While EXEL has an overall POWR Rating of A, investors could also check out these other stocks within the Biotech industry with A (Strong Buy) or B (Buy) ratings: Gilead Sciences, Inc. (GILD), Jazz Pharmaceuticals plc (JAZZ), and Otsuka Holdings Co., Ltd. (OTSKY).
For exploring more A and B-rated biotech stocks, click here.
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EXEL shares were trading at $32.83 per share on Tuesday afternoon, up $0.10 (+0.31%). Year-to-date, EXEL has declined -1.41%, versus a 3.01% rise in the benchmark S&P 500 index during the same period.
About the Author: Shweta Kumari
Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions. More...
More Resources for the Stocks in this Article
Ticker | POWR Rating | Industry Rank | Rank in Industry |
EXEL | Get Rating | Get Rating | Get Rating |
GILD | Get Rating | Get Rating | Get Rating |
JAZZ | Get Rating | Get Rating | Get Rating |
OTSKY | Get Rating | Get Rating | Get Rating |
MRK | Get Rating | Get Rating | Get Rating |