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On Wednesday, BofA Securities updated its outlook on Exelixis (NASDAQ:EXEL) shares, raising the price target to $30 from the previous $27 while maintaining a Buy rating. The adjustment comes as the firm anticipates an imminent decision on Exelixis's patent dispute over its drug Cabometyx, which is being challenged by a generic competitor.
The patents in question include the malate salt patents, which are due to expire in January 2030, and the formulation patent, set to expire in February 2032. BofA Securities outlined two potential outcomes of the trial: either Exelixis could lose on all patents, which would allow for generic competition, or they could win on both or achieve a split decision, which would protect their drug's exclusivity until 2030 or 2031.
The firm's confidence in Exelixis is also bolstered by increased estimates for zanza, as the updated price objective reflects a more detailed risk-adjusted forecast for the drug's use in various cancer treatments within their model. The analyst noted that even if Exelixis were to lose on all patents, they would still have time to appeal without the immediate risk of a generic launch due to the validity of the compound patent.
The anticipation of the trial's outcome is a significant event for Exelixis, as it will determine the market exclusivity period for Cabometyx. This decision is especially crucial for the company's financial outlook and its ability to compete in the market without generic versions of its drug being available. The raised price target to $30 reflects the potential for Exelixis to maintain its competitive edge and the expected performance of zanza in treating various stages of cancer.
In other recent news, Exelixis has been experiencing notable developments. The biotechnology company reported strong second-quarter financial performance, with a diluted net income of $0.77 per share, significantly surpassing earlier projections. Revenues for the quarter reached $637.2 million, with cabozantinib, its leading product, contributing $437.6 million.
Both Truist Securities and H.C. Wainwright have adjusted their price targets for Exelixis, raising them to $33 and $29 respectively, while maintaining a Buy rating. These adjustments reflect the company's recent performance and anticipated product approvals, including its supplementary NDA for cabozantinib in the treatment of neuroendocrine tumors (NET), accepted by the FDA with a PDUFA date set for April 2025.
Exelixis is also actively assessing the development of XL309 and plans to file up to three INDs this year. Despite the discontinuation of the XB002 program, Exelixis remains optimistic about its pipeline, including the potential expansion of its cabozantinib franchise with new indications and compounds. These are some of the recent developments revolving around the company.
InvestingPro Insights
As BofA Securities updates its outlook on Exelixis with a raised price target, it's worth noting that the company's financial health and market performance also reflect a strong position. According to InvestingPro data, Exelixis boasts a robust market capitalization of $7.27 billion and an attractive P/E ratio of 22.18. The company's revenue growth has been impressive, with a 17.48% increase over the last twelve months as of Q2 2024, signaling a strong upward trend in its financial performance.
InvestingPro Tips highlight that Exelixis is trading at a low P/E ratio relative to near-term earnings growth, which could indicate potential for stock price appreciation. Additionally, the company's management has been actively buying back shares, a sign of confidence in the company's future prospects. For investors seeking further insights, there are 13 additional InvestingPro Tips available, which provide a deeper dive into Exelixis's financial health and market performance.
These insights, combined with the anticipated decision on Exelixis's patent dispute, suggest that the company is well-positioned to maintain its market exclusivity and continue its growth trajectory. With a strong financial base and positive market momentum, Exelixis appears to be an attractive option for investors looking at the biotechnology sector.
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