Last Update 18 Dec 25

Fair value Increased 0.89%

XNCR: Advancing T Cell Engagers Will Drive Future Oncology Upside

We are nudging our Xencor fair value estimate slightly higher to $28.25 from $28.00, reflecting analysts' increased price targets and improved sentiment around the company's T cell engager and TL1A antibody programs following encouraging early stage data and clearer late stage development visibility.

Analyst Commentary

Recent Street research reflects a constructive but still risk balanced view on Xencor, with multiple firms lifting price targets as they factor in stronger T cell engager data and growing conviction in the TL1A program, while still highlighting execution and clinical readout risks that could impact long term value realization.

Bullish Takeaways

Bullish analysts are raising price targets as they attribute greater value to Xencor's T cell engager pipeline and TL1A antibody, seeing these as key long term growth drivers that can support upside to current valuation if development milestones are met.
Expectations that two T cell engager antibodies could have recommended Phase 3 doses identified within a year, with late stage trials starting in 2027, bolster confidence that the company is transitioning from early proof of concept to registrational development and improving visibility on future revenue potential.
Positive early data for XmAb819 in clear cell renal cell carcinoma and XmAb541 in CLDN6 positive tumors exceeded prior expectations, prompting bullish analysts to increase assumptions for peak penetration and probability of success and to explicitly ascribe several dollars per share of value to these programs.
The long acting TL1A antibody for ulcerative colitis is viewed as a meaningful optionality driver, with the prospect of a largely or fully enrolled Phase 2b study by next year strengthening the medium term growth narrative in immunology and supporting a higher strategic value for the platform.

Bearish Takeaways

Bearish analysts, while acknowledging promising early signals, maintain more conservative ratings and only modestly increase price targets, reflecting uncertainty around translating Phase 1 dose escalation data into durable efficacy that can underpin commercial scale adoption.
There is skepticism that early dose escalation readouts can be truly conclusive, leading to only incremental increases in modeled peak penetration and probability of success for XmAb819 and leaving room for downside to expectations if future data are less robust.
Concerns persist that the revamped pipeline still has significant clinical and execution work ahead, particularly in later stage trials, and that setbacks or delays could compress the assumed revenue ramp and weigh on valuation multiples.
Some cautious views emphasize that, despite improved sentiment, Xencor remains largely a clinical stage story with limited near term cash flow visibility, which may constrain multiple expansion until more definitive Phase 2 and Phase 3 data reduce risk in the growth outlook.

What's in the News

Xencor reported initial Phase 1 dose escalation results for XmAb819, an ENPP3 x CD3 T cell engaging bispecific antibody, in patients with advanced clear cell renal cell carcinoma. The update was based on data from 69 heavily pretreated patients across 10 intravenous and 5 subcutaneous dose cohorts as of September 19, 2025 (company announcement at AACR NCI EORTC Conference).
The ongoing multicenter, open label Phase 1 trial of XmAb819 is evaluating both dose escalation and dose expansion as monotherapy in advanced clear cell renal cell carcinoma. These efforts are intended to support the transition of this T cell engager toward later stage development if safety and activity are confirmed (company announcement at AACR NCI EORTC Conference).
Xencor highlighted its XmAb 2+1 antibody format in the XmAb819 program, which uses two tumor antigen binding domains and one T cell binding domain to bind more avidly to high antigen density tumor cells and potentially spare normal tissue. This reinforces the platform rationale behind its T cell engager pipeline (company announcement at AACR NCI EORTC Conference).

Valuation Changes

The fair value estimate has risen slightly to $28.25 from $28.00 per share, reflecting modestly higher confidence in long term pipeline contributions.
The discount rate has increased marginally to 7.34% from 7.31%, indicating a slightly higher assumed risk profile in the discounted cash flow framework.
Revenue growth has fallen meaningfully to 3.37% from 4.55%, incorporating more conservative assumptions for long term top line expansion.
The net profit margin is essentially unchanged at 16.03%, suggesting a stable view on long term profitability once the portfolio matures.
The future P/E multiple has risen slightly to 97.3x from 93.1x, implying a modestly higher valuation placed on expected future earnings power.

Differentiated drug design and flexible development platform position Xencor for increased patient adoption, operational efficiency, and attractive long-term profitability.
Strong clinical strategy and alignment with healthcare trends support sustained market expansion and robust future revenue growth.
Intensifying competition, trial execution hurdles, and commercialization risks threaten Xencor's revenue growth, profitability, and market position amid uncertain product differentiation and regulatory outcomes.

Catalysts

About Xencor

A clinical-stage biopharmaceutical company, focuses on the discovery and development of engineered monoclonal antibodies for the treatment of asthma and allergic diseases, autoimmune diseases, and cancer.What are the underlying business or industry changes driving this perspective?

Xencor's lead program XmAb942 is positioned to address significant unmet need in inflammatory bowel disease by offering longer dosing intervals (Q12-week maintenance), which could drive higher patient compliance and differentiate from existing therapies; this supports broader adoption, increased market share, and stronger future revenue growth.
The company's next-generation engineering (e.g., bispecific TL1A x IL-23 antibody) leverages advances in immunology and personalized medicine, allowing Xencor to address complex disease pathways and capitalize on the industry trend towards highly tailored biologic therapies, thus supporting pipeline expansion and long-term top-line growth.
The robust and flexible XmAb platform allows for modular drug development and the creation of differentiated assets, expected to reduce development costs and timelines, directly benefiting future operating margins and net profitability.
Clinical trial strategy emphasizes efficient dose ranging and selection, ongoing biomarker efforts, and combination-therapy optionality, positioning the company to respond rapidly to evolving standards of care and maximize the commercial potential of its pipeline, with positive implications for recurring revenue and ultimate earnings leverage.
Strong positive sentiment from clinician surveys regarding the clinical and practical advantages of Xencor's TL1A programs (e.g., therapy likely moving into first
or second-line use) reflects alignment with long-term secular trends in increased healthcare spending and demand for novel biologics, ultimately driving greater addressable market and sustained revenue growth.

Xencor Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Xencor's revenue will grow by 7.1% annually over the next 3 years.
Analysts are not forecasting that Xencor will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Xencor's profit margin will increase from -116.4% to the average US Biotechs industry of 16.1% in 3 years.
If Xencor's profit margin were to converge on the industry average, you could expect earnings to reach $29.0 million (and earnings per share of $0.39) by about September 2028, up from $-171.1 million today.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 76.9x on those 2028 earnings, up from -3.5x today. This future PE is greater than the current PE for the US Biotechs industry at 15.5x.
Analysts expect the number of shares outstanding to grow by 1.92% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 7.19%, as per the Simply Wall St company report.

Xencor Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Xencor faces increasing competition in the TL1A space, with multiple next-generation anti-TL1A and combination therapies in clinical development, potentially reducing future market share and impacting revenue growth.
The high unmet need and crowded development landscape for IBD biologics may make efficient and differentiated clinical trial execution challenging, raising risk of delayed development timelines and volatile R&D expense, which could negatively affect earnings and margins.
Xencor's strategy currently relies on advancing assets through expensive late-stage clinical trials independently, and the lack of clear commitment to out-licensing increases exposure to commercialization risks, potentially leading to higher SG&A costs and pressured net margins if it pursues solo launches.
Unproven long-term differentiation of XmAb942 (e.g., dosing convenience, improved exposure) may not sufficiently overcome payer restrictions or justify premium pricing, especially as biosimilars and other novel agents enter the market, putting anticipated top-line growth and profitability at risk.
Failure to achieve robust, biomarker-driven patient stratification or clinical efficacy endpoints-combined with uncertainty around regulatory approval for both monotherapies and bispecifics-may hinder product uptake and materially impact future revenue and cash flow visibility.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $24.1 for Xencor 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 $40.0, and the most bearish reporting a price target of just $6.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $180.3 million, earnings will come to $29.0 million, and it would be trading on a PE ratio of 76.9x, assuming you use a discount rate of 7.2%.
Given the current share price of $8.33, the analyst price target of $24.1 is 65.4% 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.

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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.

Analysts Weigh Xencor Pipeline Progress as Price Targets Inch Higher on Positive Data