Exelixis stock holds $40 target post FDA nod

On Thursday, H.C. Wainwright reaffirmed its positive stance on Exelixis (NASDAQ:EXEL) shares, maintaining a Buy rating and a $40.00 price target. The endorsement follows the recent FDA approval of cabozantinib (CABOMETYX) for specific neuroendocrine tumors. According to InvestingPro data, Exelixis demonstrates robust financial health with a "GREAT" overall score and holds more cash than debt on its balance sheet. The company has achieved impressive revenue growth of 18.5% over the last twelve months, with a market capitalization of $10.4 billion. This treatment is now approved for both adult and pediatric patients aged 12 and older who have previously treated, unresectable, locally advanced or metastatic, well-differentiated pancreatic neuroendocrine tumors (pNET), as well as for similar extra-pancreatic NET (epNET).

The FDA’s decision was influenced by the Phase 3 CABINET trial outcomes, which showed cabozantinib’s significant median progression-free survival (mPFS) improvement in patients. For the pNET cohort, cabozantinib achieved a 13.8-month mPFS compared to 3.3 months for the placebo group, and for the epNET cohort, an 8.5-month mPFS versus 4.2 months for placebo. These results were statistically significant, with hazard ratios indicating a strong treatment effect.

Following the FDA’s approval, H.C. Wainwright analysts increased the probability of cabozantinib’s approval for use in second-line and beyond treatments for neuroendocrine tumors from 95% to 100%. Despite this increased confidence in the drug’s market prospects, the firm’s valuation of Exelixis remains unchanged. The company currently trades at a P/E ratio of 20.6, which InvestingPro analysis suggests is attractive relative to its near-term earnings growth potential. With 12 additional exclusive insights available on InvestingPro, investors can gain deeper understanding of Exelixis’s value proposition.

The FDA’s approval represents a key milestone for Exelixis, potentially broadening the treatment’s application and benefiting patients with these challenging conditions. The company’s shares continue to be viewed favorably by H.C. Wainwright, as reflected in the reiterated Buy rating and price target, which indicates the firm’s continued expectation for the stock’s performance over the next 12 months. The stock has already demonstrated strong momentum with a 55% return over the past year and maintains a perfect Piotroski Score of 9, indicating excellent financial strength. Detailed analysis and comprehensive valuation metrics are available in the Pro Research Report on InvestingPro, part of the platform’s coverage of over 1,400 US equities.

In other recent news, Exelixis, Inc. has received FDA approval for its drug Cabometyx to treat certain advanced neuroendocrine tumors (NETs) in patients aged 12 and older. This approval, based on the Phase 3 CABINET trial, marks the first systemic treatment for previously treated NETs, regardless of the primary tumor site or other factors. Following this development, Stifel analysts have reiterated a Hold rating on Exelixis stock, maintaining a price target of $36, while Leerink Partners raised their price target to $33 and maintained a Market Perform rating. Citi reaffirmed a Buy rating with a $45 price target, emphasizing the approval as a positive step for Exelixis.

The FDA’s decision came ahead of the anticipated Prescription Drug User Fee Act date, with the CABINET trial showing significant progression-free survival benefits. Exelixis’s financial guidance for fiscal year 2025, which previously did not include contributions from the NET indication, is expected to be updated in the upcoming earnings call. Analysts at Stifel project incremental U.S. sales for Cabometyx, with figures reaching $236 million by 2027, while Leerink estimates $75 million in revenue from NET in 2025, potentially reaching $750 million in peak sales.

Additionally, Exelixis plans to initiate the STELLAR-311 pivotal trial in the first half of 2025, reflecting the company’s ongoing commitment to advancing cancer treatment. The European Medicines Agency is also reviewing a Marketing Authorization Application for the NET label expansion. Investors will be keenly watching for further updates, including the American Association for Cancer Research meeting and data from the STELLAR-303 trial, both set to provide insights into Exelixis’s pipeline.

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