Last Update08 Sep 25Fair value Decreased 1.41%
Exelixis’ consensus price target saw a marginal decrease to $44.06 as enthusiasm for positive Phase 3 colorectal cancer trial results and potential new revenue from zanzalintinib was offset by revenue model reductions from the discontinuation of head and neck cancer development and ongoing concerns about long-term growth beyond the Cabometyx 2031 patent expiry.
Analyst Commentary
- Bullish analysts raised price targets due to positive topline results from the STELLAR-303 Phase 3 trial, where zanzalintinib in combination with atezolizumab showed a statistically significant improvement in overall survival in metastatic colorectal cancer, paving the way for potential regulatory approval.
- Multiple analysts forecast potential for over $1B in peak sales for zanzalintinib in the third-line colorectal cancer setting if efficacy is confirmed in further studies.
- Some analysts remain cautious, noting limited detail available from the topline data and citing the need for more information to determine zanzalintinib's competitive positioning and true peak sales opportunity in colorectal cancer.
- Bearish analysts lowered near-term price targets due to Exelixis discontinuing further advancement of STELLAR-305 in head and neck cancer, removing this indication and its expected future revenue from their models.
- Concerns regarding valuation and the long-term revenue risk posed by the anticipated 2031 Cabometyx patent cliff led to more cautious outlooks, with some analysts awaiting demonstration of additional life cycle management successes to offset future losses.
What's in the News
- Exelixis will not proceed into the Phase 3 portion of the STELLAR-305 study in head and neck cancer, leading Morgan Stanley to lower its price target to $46 from $48 and remove the SCCHN indication from its model (Morgan Stanley, 2025-07-29).
- Barclays raised its price target on Exelixis to $40 from $29, reflecting a higher probability of success in colorectal cancer (Barclays, 2025-07-10).
- Exelixis announced positive topline Phase 3 results from the STELLAR-303 trial, where zanzalintinib with atezolizumab demonstrated a statistically significant improvement in overall survival versus regorafenib in previously treated metastatic colorectal cancer, with no new safety signals identified; the trial will continue for further analysis (Key Developments, 2025-06-22).
- The company reaffirmed 2025 earnings guidance, projecting total revenue between $2.25 billion and $2.35 billion and net product revenues between $2.05 billion and $2.15 billion (Key Developments, 2025-07-28).
- Exelixis completed share repurchases totaling approximately $796 million under two buyback programs, retiring over 14.3 million shares (5.06% outstanding) from the August 2024 program and 7.4 million shares (2.68% outstanding) from the February 2025 program (Key Developments, 2025-07-28).
Valuation Changes
Summary of Valuation Changes for Exelixis
- The Consensus Analyst Price Target remained effectively unchanged, moving only marginally from $44.68 to $44.06.
- The Consensus Revenue Growth forecasts for Exelixis remained effectively unchanged, moving only marginally from 11.9% per annum to 11.7% per annum.
- The Net Profit Margin for Exelixis remained effectively unchanged, moving only marginally from 37.00% to 36.73%.
Key Takeaways
- Strong market presence and expanding portfolio in oncology therapeutics drive durable revenue growth and greater diversification, supported by successful product launches and pipeline advancements.
- Robust financial position and disciplined capital allocation enable ongoing investment in innovation, global expansion, and strategic partnerships for sustained long-term growth.
- Heavy reliance on one drug, margin pressures, pipeline uncertainty, rising competition, and regulatory risks collectively threaten diversification, profitability, and long-term growth.
Catalysts
About Exelixis- An oncology company, focuses on the discovery, development, and commercialization of new medicines for difficult-to-treat cancers in the United States.
- The recent introduction and rapid uptake of CABOMETYX in neuroendocrine tumors, combined with its continued strength and market leadership in renal cell carcinoma, signals an expanding patient base in tumor types with high unmet need; this is poised to drive strong durable revenue growth as aging populations and rising cancer incidence increase long-term demand for oncology therapeutics.
- Positive top-line results from pivotal trials (e.g., STELLAR-303 for zanzalintinib in colorectal cancer) and an advancing late-stage pipeline provide significant potential for new product approvals and label expansions, supporting future earnings growth and further diversifying revenue streams as precision medicine and targeted therapy adoption accelerates across global oncology markets.
- Expansion into emerging global markets-exemplified by the European Commission's approval of CABOMETYX for NET and ongoing international partnerships-should broaden accessible patient populations, contributing to long-term revenue growth as healthcare infrastructure and access to advanced therapies improve globally.
- The company's substantial free cash flow, strong balance sheet, and disciplined capital allocation (including aggressive share repurchases and prioritization of high-probability, high-value R&D programs) position Exelixis to invest in next-generation discovery and strategic partnerships, which has the potential to improve operating leverage and net margins over time as the product portfolio scales.
- Exelixis's leadership in small molecule and biologics innovation, exemplified by a progressing early-stage pipeline (XL309, XB010, XB628, XB371), creates multiple potential future catalysts for product launches, enabling the company to maintain relevance and capture increasing share within the expanding biomarker-driven and combination therapy oncology market, thus supporting both top-line growth and long-term resilience in earnings.
Exelixis Future Earnings and Revenue Growth
Assumptions
How have these above catalysts been quantified?- Analysts are assuming Exelixis's revenue will grow by 11.7% annually over the next 3 years.
- Analysts assume that profit margins will increase from 27.0% today to 36.7% in 3 years time.
- Analysts expect earnings to reach $1.1 billion (and earnings per share of $4.13) by about September 2028, up from $602.3 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting $1.6 billion in earnings, and the most bearish expecting $607.3 million.
- In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 10.6x on those 2028 earnings, down from 17.1x today. This future PE is lower than the current PE for the US Biotechs industry at 15.3x.
- Analysts expect the number of shares outstanding to decline by 5.73% per year for the next 3 years.
- To value all of this in today's terms, we will use a discount rate of 6.78%, as per the Simply Wall St company report.
Exelixis Future Earnings Per Share Growth
Risks
What could happen that would invalidate this narrative?- Cabozantinib (CABOMETYX) remains the dominant revenue driver, with over 90% of total revenues still dependent on this single product; any future loss of exclusivity or generic erosion post-patent expiry would likely lead to steep drops in revenue and net margins.
- The increasing proportion of 340B sales (over 24% of total volume, up 4 percentage points year-over-year) means a greater share of revenues is subject to steep discounts, placing sustained pressure on gross-to-net and ultimately compressing operating margins over time.
- Exelixis' decision not to advance certain pivotal trials (e.g., STELLAR-305 in head and neck cancer) highlights risks that pipeline assets may not achieve regulatory or commercial success, potentially dampening future revenue diversification and earnings growth if new indications or drugs underwhelm.
- Heightened competition in core markets-including the potential introduction of next-generation TKIs, immunotherapies, or novel agents in RCC, colorectal, and NETs-could erode Exelixis' market share, further pressuring topline growth and profitability.
- Ongoing industry and regulatory headwinds, such as expansion of government drug pricing negotiations, rising gross-to-net deductions, and regulatory scrutiny over combination therapies, could restrict Exelixis' pricing power and reimbursement rates, limiting long-term revenue growth and net income expansion.
Valuation
How have all the factors above been brought together to estimate a fair value?- The analysts have a consensus price target of $44.056 for Exelixis based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $60.0, and the most bearish reporting a price target of just $36.0.
- In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $3.1 billion, earnings will come to $1.1 billion, and it would be trading on a PE ratio of 10.6x, assuming you use a discount rate of 6.8%.
- Given the current share price of $38.28, the analyst price target of $44.06 is 13.1% higher.
- We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.
How well do narratives help inform your perspective?
Disclaimer
AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.