Stifel maintains hold rating on Exelixis stock, sets $38 target

Stifel analysts reaffirmed a Hold rating on Exelixis (EXEL) with a $38 price target following ASCO presentations of zanzalintinib data, noting similar efficacy but a higher incidence of adverse events compared to cabozantinib in combination with nivolumab; this is potentially due to dose selection. Despite the Hold rating, Exelixis reported strong Cabometyx sales of $511 million, a 36% year-over-year increase, leading to revised financial guidance and prompting other firms like TD Cowen and RBC Capital to raise their price targets or maintain positive ratings. Exelixis's STELLAR-002 trial also showed promising results with zanzalintinib in combination with other treatments, further bolstering investor confidence reflected in the stock's 28.77% year-to-date return.

Analysis

Exelixis (NASDAQ:EXEL) presents a complex but largely positive picture following recent ASCO presentations and operational updates. While Stifel analysts reiterated a Hold rating with a $38 price target, below the current $42.75 trading price, this contrasts with InvestingPro data indicating an EXCELLENT financial health score and a perfect Piotroski Score of 9, signifying robust operational efficiency. The ASCO presentations on zanzalintinib in advanced solid tumors and ccRCC, particularly in combination with nivolumab, showed dose-escalation and dose-expansion data. Analysts noted similarities between the 100mg zanzalintinib dose and the 60mg cabozantinib dose regarding patient dose modifications, but also highlighted a higher incidence of Grade >3 adverse events in the zanzalintinib group compared to cabozantinib/nivolumab in the P3 CHECKMATE-9ER trial, attributing this to dose selection. Despite these concerns, investor confidence appears strong, evidenced by a 28.77% year-to-date return. Further bolstering this, Exelixis's STELLAR-002 trial reported a promising 63% objective response rate and 90% disease control rate for zanzalintinib with nivolumab in advanced clear cell renal cell carcinoma. Commercially, Cabometyx sales surged 36% year-over-year to $511 million, surpassing estimates and leading to revised financial guidance. This strong performance prompted TD Cowen to raise its target to $44 (retaining a Buy) and RBC Capital to maintain an Outperform rating ($40 target). The company's strategic clinical trial adjustments, such as dual primary endpoints for the STELLAR-303 trial in colorectal cancer, and ongoing share repurchase activities underscore management's confidence and focus on expanding its market position.

Key Decisions for Investors

• Investors should weigh the strong fundamental signals, such as Exelixis's excellent financial health, perfect Piotroski score, and robust Cabometyx sales growth, against Stifel's cautious Hold rating and the current stock price exceeding Stifel's target.
• Closely monitor further clinical data on zanzalintinib, particularly regarding the management and profile of adverse events relative to its efficacy, as this will be critical for its future prospects.
• Consider the divergent analyst price targets ($38 from Stifel, $44 from TD Cowen, $40 from RBC) and the significant year-to-date stock appreciation when evaluating entry or exit points for EXEL.
• Evaluate Exelixis's ongoing clinical pipeline advancements and share repurchase program as indicators of management's confidence and long-term value creation strategy.