Exelixis stock price target lowered to $35 at UBS on Zanza concerns

UBS has lowered its price target on Exelixis (EXEL) to $35 from $38, maintaining a Neutral rating, citing significant concerns regarding the upcoming Phase 3 STELLAR data for its Zanza pipeline program. The firm believes a disappointing outcome for Zanza, which is crucial for future growth, could lead to "meaningful downside" given the impending loss of exclusivity for Exelixis's primary revenue driver, Cabometyx, in 2030. This downgrade reflects a broader divergence in analyst sentiment, with some firms reducing price targets due to recent revenue misses and trial decisions, while others initiate coverage with Buy ratings, highlighting the market's mixed outlook on the company's long-term revenue potential.

Analysis

Exelixis (EXEL) is facing a critical inflection point centered on its Zanza pipeline program, prompting a cautious stance from UBS which lowered its price target to $35 from $38 while maintaining a Neutral rating. The downgrade is primarily driven by concerns over the upcoming Phase 3 STELLAR trial data, with a UBS survey of 20 oncologists suggesting the results are likely to disappoint and could trigger "meaningful downside" for the stock. This pipeline uncertainty is magnified by the company's heavy reliance on Zanza to offset the looming loss of exclusivity (LOE) for its key revenue driver, Cabometyx, in 2030. UBS has already modeled for this risk by reducing its EV/2030 sales multiple and cutting post-2031 Cabometyx sales estimates by 64%. The market's sensitivity to pipeline news was previously demonstrated by a roughly 20% stock sell-off after the discontinuation of Zanza's head and neck cancer indication. Analyst sentiment is notably divergent; while RBC Capital also lowered its price target following a Q2 2025 revenue miss, Goldman Sachs initiated with a Buy rating, citing Zanza's potential, and Barclays began coverage with an Equalweight rating. This mixed outlook exists despite the stock's strong 51.8% return over the past year and its solid financial health metrics.

Key Decisions for Investors

• Investors should treat the upcoming Phase 3 STELLAR data release for Zanza at the ESMO conference as a major binary event, with abstract titles on September 20 serving as a key near-term catalyst for volatility.
• Given the stock's significant dependence on the Zanza pipeline to mitigate the 2030 patent cliff for Cabometyx, any negative data could lead to a sharp downside correction, placing the recent 51.8% year-long gain at risk.
• The wide dispersion in analyst price targets, ranging from $35 to $47, highlights a 'battleground' scenario; portfolio managers should weigh the potential pipeline upside against the fundamental risk of the impending Cabometyx LOE.
• Consider the recent change in R&D leadership as a signal of strategic review, and monitor for any further guidance on the commercial strategy for Cabometyx in the years leading up to its patent expiration.