09 Mar This under-the-radar biotech stock can surge 40%, Wells Fargo says
It’s time to buy Exelixis shares ahead of readouts on the biotech firm’s cancer treatment, according to Wells Fargo. Analyst Derek Archila initiated coverage of Exelixis with an overweight rating, saying the biotech company’s consistent revenue growth and upcoming clarity around the firm’s cancer product called cabozantinib will drive upside. “We like cabo’s near-term growth prospects and believe upcoming clarity on its [loss of exclusivity] will serve as a catalyst for shares. Further, the combo of EXEL’s significant cash pile and collection of pipeline assets should generate future value, in our view,” Archila wrote in a Thursday note. The analyst said that the firm’s 2023 guidance appears achievable, with consensus expectations of 17% year-over-year growth for cabozantinib. That growth will be further supported by readouts in the second half of 2023 that could mean upside for estimates. “Docs are bullish on cabo+atezo’s upcoming data in pre-chemo [metastatic castration-resistant prostate cancer]. … Given the trial’s control arm, our docs believe the trial should be positive,” Archila wrote. “The big question, though, is whether cabo can get approved on PFS , or will it need OS . We est this could be a ~ $400MM oppty for cabo, which is conservative relative to what our docs suggest,” he added. The company reported earlier this month disappointing trial results, which evaluated cabozantinib and atezolizumab in some patients with renal cell carcinoma. Exelixis shares are 2% higher this year, after falling 12% in 2022. The analyst’s $23 price target implies 40% upside from Wednesday’s closing price of $16.36. The stock is up more than 3% in Thursday premarket trading. EXEL 1D mountain Exelixis shares 1-day —CNBC’s Michael Bloom contributed to this report.