Exelixis stock poised for Q2 beat on strong script growth, JMP says

Exelixis (NASDAQ:EXEL) is anticipated to exceed second-quarter analyst expectations, driven by strong cabozantinib prescription growth and projected U.S. sales 1% above consensus, according to JMP Securities. This positive outlook is reinforced by recent successful Phase 3 trial results for zanzalintinib in metastatic colorectal cancer and positive feedback on Cabometyx's neuroendocrine tumor launch, leading to multiple analyst price target increases and rating upgrades, despite some caution regarding broader pipeline diversification.

Analysis

Exelixis (EXEL) is demonstrating significant operational momentum and positive clinical pipeline developments, creating a bullish outlook among most analysts. The company is poised to exceed second-quarter earnings expectations, driven by a 7% quarter-over-quarter increase in prescriptions for its primary cancer drug, cabozantinib. JMP Securities projects cabozantinib's U.S. sales will reach $536.8 million, representing 24% year-over-year growth and surpassing the consensus estimate of $529.2 million. This is underpinned by strong fundamentals, including 24.5% revenue growth over the last twelve months and a perfect Piotroski Score of 9. Further bolstering this outlook are positive top-line results from the STELLAR-303 phase 3 trial for zanzalintinib, which prompted price target increases from H.C. Wainwright (to $53) and Truist Securities (to $56). The upcoming earnings report will also provide the first sales data for cabozantinib's new indication in neuroendocrine tumors. However, analyst sentiment is not uniformly positive; Stifel maintains a Hold rating ($38 PT), and UBS remains Neutral, citing concerns about the company's pipeline diversification.

Key Decisions for Investors

• Investors should monitor the upcoming Q2 earnings release for confirmation of cabozantinib sales growth against the $536.8 million projection and for the initial contribution from its new neuroendocrine tumor indication.
• The positive Phase 3 data for zanzalintinib represents a significant de-risking event for the pipeline, potentially justifying the bullish price targets and warranting consideration for those with a positive view on the oncology space.
• Despite strong momentum, it is prudent to consider the cautionary notes from UBS and Stifel regarding pipeline diversification, which could pose a long-term risk if the company remains heavily reliant on the cabozantinib franchise.
• The wide dispersion in analyst price targets, from $38 to $56, suggests significant debate over the company's long-term valuation, requiring investors to conduct their own due diligence on the pipeline's full potential beyond the current positive catalysts.