On Thursday, Brookline Capital Markets began coverage on Exelixis, Inc. (NASDAQ:EXEL), a commercial-stage biotechnology firm, assigning a Buy rating and setting a price target of $40.00.
The company, which currently trades at $33.82 and boasts a "GREAT" financial health score according to InvestingPro, has shown strong momentum with a 51% price return over the past six months.
The firm's analysts project that Exelixis will experience significant growth in the sales of its existing products, Cabometyx and Cometriq, and also anticipate the successful development and commercialization of new products from its pipeline in the coming years.
Brookline Capital Markets' analysts expect that, with the continued development of its commercial drugs and the potential from its earlier stage pipeline, Exelixis' total revenue will grow at a compound annual growth rate (CAGR) of 15% over the next 7-10 years, potentially reaching $7.1 billion by 2033.
This optimistic outlook aligns with the company's current performance, as InvestingPro data shows revenue growth of 17.3% in the last twelve months, with analysts expecting continued growth this year. This forecast is based on the company's ability to grow unit sales, add indications for Cabometyx, and launch new products.
According to the analysts, Exelixis is also likely to see its total product sales soar to $6.7 billion by 2033, driven by the introduction of additional indications for Cabometyx and the launch of another meaningful product. These estimates hinge on successful product launches and market acceptance.
The coverage initiation reflects Brookline Capital Markets' confidence in Exelixis' strategic growth initiatives and product development. The analysts emphasized that their revenue estimates are achievable, but they also cautioned that, as with all development-stage programs, there is a very high degree of risk involved.
In their analysis, Brookline Capital Markets concluded that, on a probability and investment risk-adjusted basis, Exelixis could reach a valuation of $40 per share in the next 12 to 18 months. This assessment takes into account the company's current development trajectory and the anticipated expansion of its product offerings.
In other recent news, Exelixis, Inc. reported a 9% increase in net product revenues, reaching $478 million, leading to a raised full-year revenue guidance for 2024. This strong financial performance was highlighted in the company's Third Quarter 2024 Earnings Call.
Meanwhile, BMO Capital Markets and BofA Securities downgraded Exelixis due to a more balanced risk/reward scenario, despite raising their price targets.
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. These are some of the recent developments that investors should be aware of as they provide insight into the company's future trajectory.
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