William Blair starts Xencor stock with Outperform rating

On Monday, William Blair initiated coverage on shares of Xencor, Inc. (NASDAQ: XNCR), currently trading at $9.70, assigning an Outperform rating to the biopharmaceutical company. The stock has shown resilience with an 8.5% gain over the past week, despite a challenging six-month period. Stifel analysts cited the potential of Xencor’s wholly owned pipeline to produce distinctive clinical data in the upcoming 6 to 12 months as the primary reason for the positive outlook. According to InvestingPro analysis, the company currently appears undervalued based on its Fair Value assessment.

Xencor’s technology, particularly its XmAb platform, has shown promising proof of concept through Amgen (NASDAQ:AMGN)’s drug xaluritamig. This success is expected to be applicable to Xencor’s wholly owned programs. The company maintains a strong financial position with a healthy current ratio of 6.61 and more cash than debt on its balance sheet, though InvestingPro data indicates rapid cash consumption. The company is recognized for its advancements in the development of T-cell engagers (TCEs) for the treatment of solid tumors, an area where significant progress is anticipated.

The Outperform rating reflects William Blair’s confidence in Xencor’s ability to stand out in the biopharmaceutical industry. The firm’s analysts believe that the company’s pipeline has the potential to yield unique clinical results, especially in the field of TCEs, which are increasingly becoming a focal point for cancer treatment innovations.

Xencor, based in Monrovia, California, focuses on developing novel therapeutics in the fields of cancer and autoimmune diseases. With a market capitalization of $683 million and analyst price targets ranging from $22 to $40, the company shows significant upside potential. Its XmAb technology is a crucial component of its strategy to create transformative medicines. With this technology, Xencor aims to improve the treatment landscape for patients with serious diseases. For deeper insights into Xencor’s financial health and growth prospects, investors can access the comprehensive Pro Research Report available on InvestingPro.

The analyst’s statement underscores the firm’s anticipation of Xencor’s success: "We are initiating coverage of Xencor with an Outperform rating based on the potential of the company’s wholly owned pipeline to generate differentiated clinical data over the next 6 to 12 months."

This new coverage from William Blair provides investors with a perspective on Xencor’s future prospects, highlighting the company’s innovative approach to drug development and its potential impact on the treatment of solid tumors through its proprietary technology.

In other recent news, Xencor Inc (NASDAQ:XNCR) announced that it will restate its financial statements for the fiscal year ending December 31, 2023, and subsequent quarterly periods through September 30, 2024. This decision follows the identification of errors related to a royalty transaction and tax misstatements. The company, in consultation with its Audit Committee and RSM US LLP, found that a royalty transaction with OMERS Life Sciences should have been recorded as debt rather than deferred income. This error led to a $12.4 million understatement in accounts receivable and a $156.9 million overstatement in deferred income. Additionally, revenue and interest expense were understated by $6.3 million and $5.5 million, respectively. Xencor also discovered a misstatement in research and development expenses under Section 174 of the Internal Revenue Code, resulting in an uncertain tax position of $5.6 million. The company is working to address these issues and plans to file the necessary amendments before its next Annual Report. These developments will not impact Xencor’s cash or marketable securities, and the restatement is not expected to materially affect its future business operations.

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