Monday, Brookline Capital Markets initiated coverage on Exelixis, Inc. (NASDAQ:EXEL) with a Buy rating. The commercial-stage biotechnology company, known for its drugs Cabometyx and Cometriq, and partnership with Genentech on Cotellic, is expected to see significant growth in the coming years.
The company's strong financial foundation is evident in its impressive 96% gross profit margin and $2.1 billion in revenue over the last twelve months. According to InvestingPro analysis, Exelixis maintains excellent financial health with strong profitability metrics.
The analyst from Brookline Capital Markets projects that Exelixis will expand unit sales of its current products and will add new indications for Cabometyx. Additionally, they anticipate the commercialization of a new product from Exelixis's pipeline within the next few years.
This expansion is expected to fuel a compound annual growth rate (CAGR) of 15% over the next 7-10 years, potentially raising total revenue to $7.1 billion by 2033. The company's track record supports this outlook, with InvestingPro data showing a 17.3% revenue growth in the last twelve months and nine analysts recently revising earnings estimates upward.
The analyst's revenue estimates are based on the assumption of successful product launches and market growth. They also predict that Exelixis's total product sales could reach $6.7 billion in 2033, contingent on the company bringing additional indications online for Cabometyx and launching another meaningful product in the near future.
While the analyst's outlook is positive, they acknowledge a very high degree of risk inherent in the development-stage programs of biotechnology companies. Despite this, the analyst believes that, after adjusting for probability and investment risk, Exelixis could be valued at $40 per share in the next 12 to 18 months.
Based on comprehensive InvestingPro analysis, which considers multiple valuation metrics and growth factors, Exelixis currently appears slightly undervalued, with 12 additional ProTips available for subscribers.
Brookline Capital Markets' coverage initiation and the subsequent Buy rating provide a glimpse into the potential growth trajectory for Exelixis as it continues to develop and commercialize its biotechnology products.
In other recent news, Exelixis Inc (NASDAQ:EXEL). has seen several noteworthy developments. The biotechnology firm has reported a 9% increase in net product revenues, reaching $478 million, leading to a raised full-year revenue guidance for 2024.
The company's focus is now on its drug zanzalintinib, which is currently undergoing trials for colorectal cancer. However, BMO Capital Markets and BofA Securities have both downgraded Exelixis due to a more balanced risk/reward scenario, despite raising their price targets to $40.00 and $39.00 respectively.
Stephens has reiterated an Equal Weight rating for Exelixis, maintaining a $29.00 price target. These recent developments suggest that investors and market watchers are now looking ahead to further developments regarding zanzalintinib's clinical trials, which will be a critical factor in the company's future trajectory.
The U.S. Food and Drug Administration (FDA) has scheduled an Oncologic Drugs Advisory Committee (ODAC) meeting for Exelixis's supplemental New Drug Application (sNDA) for CABOMETYX, with a decision expected by April 3, 2025. Exelixis is also expanding its oncology portfolio, including a collaboration with Merck (NS:PROR) for zanzalintinib, and is shifting focus towards diversifying its portfolio.
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