This TabStocks Article takes an IN-DEPTH look at EXEL in September 2022
Stock Name and Trading Stock Exchange Platform
Exelixis Inc. – NASDAQ
The Stock Sector
Exelixis is a biopharmaceutical company focused on oncology i.e. the study and treatment of cancers and tumors, via innovative drugs.
Its leading medicine Cabometyx treats:
Advanced Kidney cancer, Liver cancer, Thyroid Cancer.
The company has a rich pipeline that could advance its goals in the long term. It is also engaged in the discovery and commercialization of new drugs to fight chronic ailments.
It has partnered with pharma giants such as Bristol Myers Squid to develop different medicines. Other signature drugs by the company include COTELLIC, COMETRIQ, and MINNNEBRO.
The company was founded in 1994 by Corey Goodman and Stelios B. It is headquartered in California, US.
Recent Most Important News about EXEL
The California-based biotech reported its earnings in early August and the results stirred mixed reactions.
Despite beating earnings expectations, adjusted profit the quarter inched lower for the quarter.
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The company however maintains that it will achieve guidance for the year.
It shared the good news in July of a secured exclusive license from Polish Ryvu Therapeutics to develop cancer therapies using STING (stimulator of interferon genes) technology.
The stock has received a good rating from a few skeptics and is one of the most sought-after currently. This is because of the resilient healthcare sector which can withstand downturns.
Institutional holding accounts for a significant percentage of the company, with renowned firms backing the stock.
Crossmark Global Holdings made an entry into the stock purchasing a confirmed 800 shares. This will have a positive effect and go on to show faith in the stock.
Selling action has been pretty high as well, with some firms decreasing their positions.
The stock was in the oversold territory in the past week, thus adversely affecting the share price.
EXEL continues to propel its ambition beyond its novel product Cabometyx and develop new drugs that will contribute as much to its bottom line.
Concerns were arising from this as over-dependence on one product is perilous.
BMO Capital markets have dismissed the fallacious notion that the EXEL could go under.
The experts cited that it is well positioned in its niche and the concerns over generics are overblown.
Current Position of EXEL
The company had a great run in 2021 when the bulls were still in control, but the situation has greatly changed from the start of the year.
It is down a huge chunk recently due to disruptions in the global economy. Investors have ditched stocks in general and opted for more conservative options.
The growth of the company has come majorly from approval from administrators in the FDA. Regulation plays a huge role in the pharmaceutical world and could either make or break an organization.
EXEL has a history dating back to the early 90s. It is undisputedly a well-established player and sits on a market capitalization of $5B.
Disruption in the sector, although a rare feat is becoming increasingly possible. Most big corporations have been around for a hundred years and are resolute on maintain this position.
EXEL and a few players are challenging this status quo and look to bring innovation to the age-old industry.
The growth of its core drug has done well over the year, but with the expiry of the patent due in a few years, aggressive competitors could scoop away its market prominence.
Cognizant of this vital factor, EXEL has spearheaded initiatives to develop new pipeline assets that could secure it a position as a pharmaceutical giant.
It has done this by launching at least 10 discovery programs and other mechanisms to ensure they come up with the next miracle drug, that saves lives and equally generates revenue.
Its Cabo series has done quite well and bagged the company a couple of billions.
The management of the company comprises mostly individuals from the scientific community who focus on the core innovation and not just business costs.
Dr. Michael Morrissey has assured investors that expanding their pipeline is the main issue.
As our pipeline advances, we are building out our infrastructure, both on our Alameda campus as well as in the greater Philadelphia area,
He is optimistic that they can meet their goals and deliver the set targets. EXEL pushes a noble cause to ensure cancer patients possibly recover and live longer.
The landscape is similarly disputed by many rivals, both conventional and emerging corporations. This includes the likes of Pfizer($PFE), Takeda Oncology, and Deciphera.
Intense and rigorous clinical trials are underway as they look to develop new solutions presently. It has chosen InForm and IRT to assist with user management and configuration.
Cancer cases reported worldwide continue to proliferate, accounting for a massive death toll in the previous year, at nearly 10 million victims.
The company is in a good position at the moment and can comfortably continue with research and development which is a main area of focus and not an additional luxury.
It is thus spending hundreds of millions to ensure tests and experiments turn out to be fruitful.
EXEL Stock Price Chart
As of the time of writing the stock is trading at $17.71 on the 1st of September 2022.
The stock has slipped severely from December last year. It has been on a general uptrend until mid-May when it slipped off.
The stock has since gotten back up but is still below its highs. It is down by -9.21% in the past year. It is trading at a day range of $17.62-$18.12.
It has traded at a yearly high of $23.40 and an annual low of $15.50. It is very volatile at the moment due to the overall macroeconomic conditions.
The speech by Jerome Powell further stated that the federal reserve would maintain its hawkish stance against inflation has negatively impacted the markets.
Interest rates are expected to go up by at least a 50-point basis, thus investors are fleeing stocks. The stock price is very low price and very attractive at this point.
Sentiment on EXEL
EXEL has the backing of many institutional investors including Renaissance Technologies, Blackrock, Vanguard, and more.
With a revenue multiple of about 2.4x, it is dirt cheap and the valuation is considerably low.
Institutional backing goes a long way to ensure the prosperity of an organization. Growth is still projected to continue with the extension of the patent and pipeline expansion.
An acquisition is highly possible and could prove to be accretive. Experts agree that the real value of the stock is much more than the current value.
This is considering the patent renewals and sudden interest by the banking giant Goldman Sachs. Vicki L.
Goodman, MD & Executive vice president at the company believes EXEL is at an inflection point, after her recent appointment to the post.
The company is looking very prospective and could rise even higher if it overcomes hurdles.
Pros of EXEL based on Investors Outlook
- Profitability – The company is doing well financially and will likely continue to do so in the near term. This is promising to shoot up astronomically.
- Cash flow – The company has plenty of cash flow which could be utilized further to better its operations.
- Recession-Proof – The healthcare sector is known to withstand the toughest of times. Demand remains solid even during these periods and the federal government prioritizes related companies.
- Undervalued – For an established and profit-generating Pharmaceutical company of its caliber, the company is enormously undervalued.
Cons of EXEL based on Investors Outlook
- Concentration risk – The company needs to diversify its interest fast because it has major milestones ahead to tackle ahead.
- Single Market risk – The company only operates in the US and this poses a threat to its existence if the markets get overwhelmed, especially with the recessionary fears.
Profits for EXEL
The company has been able to deliver solid profits to investors. It is in good financial health and its latest earnings report in August attests to this.
EXEL thwarted the EPS consensus by an astounding +14.55%. The revenue for the quarter rose by +8.89%., equating to about $419.43M.
Operating expenses went up by +30%, valued at $322.24M for the quarter. This is because it is reinvesting a lot of its cash to expand its operations.
The net profit margin was 16.85%, a decrease of -32.46%. This caused a huge stir and some panic selling.
The fundamentals are still strong and the revenue reflects this.
Profitability was affected by their additional expansion efforts coupled with increased costs of production due to the economic situation.
The net income was recorded at 70.67M. Down by -26%. EBITDA was at $88m which also fell by -30%.
The balance is looking positively up, with the total assets of the company valued at $2.88B, up by +21% over the year.
Cash and short-term investments have also increased by a good +13% over the year, coming in at $1.53B. The company has an incredible 8.55% return on the capital rate.
Free cash flow is now estimated to be in the region of $40.53M. EXEL has done a great job in keeping its financials strong.
Its debt-to-equity ratio is very low at 0.06 which is a very impressive feat. Heir total liabilities currently stand at $490.14M
EXEL’s fantastic run is just getting started, it could explode with ongoing advancements.
Pros of Investing in EXEL based on the General Outlook
- Top Management – The company is manned by well-qualified personnel whose priority is to deliver to not only investors but the broader society.
- Prominent Player – EXEL has already established its presence in the industry and it is now at a crucial point of crossing the mid-cap level to become a large corporation.
- New Developments – The company has opted for growth over profits and is rapidly advancing initiatives to develop a young pipeline, with potentially the next big product.
- Successful Track Record – Unlike many other startups that are still in the trial phase, EXE: has shown time and again its prowess in the sector, with a viable franchise. Its drugs have helped to fight cancer and continue to yield results.
Cons of investing in EXEL based on the General Outlook
- Capital intensive – Its ambitious goals may turn out to be overexerting and hamper its cash flow. Capital is getting expensive with rate hikes and raising more will be an uphill battle in the days ahead.
- Competitive sector – New players emerge every day and the company will have to keep up or else be ousted from the market. Its dominance slowly declines as it grows larger and thus cannot operate faster than small newbies.
Growth Likelihood and Potential for EXEL
The company is a gem in the biotech sector and was the first treatment for renal cell carcinoma approved by the FDA.
It is additionally carrying out many tests this year that look very promising. BMO Capital anticipates that the stock will outperform the market expectation.
The healthcare space is capable of weathering headwinds and EXEL is an exemplar of resilience. Billionaire Jeff Bezos has affirmed that Biotech is the future in the coming decades and companies in the space stand to benefit a great deal.
The company is on the right side of regulators, with patents and approvals bearing witness to this. It is at a critical stage where it could be the next big thing.
In the short term, it could battle a lot of volatility which is now at all-time highs since 1929. Even in a market depression, medicine is irreplaceable.
Is Exelixis Inc EXEL Biotech Still a Reliable Defensive Stock?
Analysts maintain a buy consensus on the stock and an upside target of $38. This is a huge growth of almost double its current price.
Moving averages are neutral while oscillators indicate a buy. The stock is lowly priced compared to its peers in the sector.
The stock is therefore a solid defensive stock that could cushion investors from a downturn and shoot back up in a bull run.
Prudence should be observed in making an entry, but the stock is already beaten down, and buying now could similarly pay off on the distant horizon.
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