Key Takeaways:
- Exelixis demonstrates strong commercial execution with cabozantinib franchise revenue growing 19% year-over-year to $520 million in Q2.
- EXEL stock could reach $61/share by December 2027 based on conservative valuation assumptions, representing a 54% total return with 22% annualized gains.
- The recently approved NET indication achieved 35% market share within months, positioning cabozantinib as the best-in-class oral therapy in neuroendocrine tumors.
- Zanzalintinib’s positive Phase III results in colorectal cancer mark the first IO/TKI combination to show a survival benefit, with regulatory filing planned for late 2025.
Exelixis (EXEL) has quietly built one of biotech’s most compelling franchise stories. The company’s flagship oncology drug, cabozantinib, continues to exceed expectations in renal cell carcinoma while expanding into new indications, such as neuroendocrine tumors.
Meanwhile, next-generation candidate zanzalintinib just delivered breakthrough Phase III results in colorectal cancer.
Exelixis serves cancer patients globally through its comprehensive TKI (tyrosine kinase inhibitor) platform. It discovered and developed cabozantinib internally, navigating early setbacks to build what’s now the leading treatment for kidney cancer with seven approved indications.
Core offerings include CABOMETYX for advanced renal cell carcinoma, hepatocellular carcinoma, differentiated thyroid cancer, and the recently approved neuroendocrine tumor indications, alongside zanzalintinib in late-stage development across multiple tumor types.
The oncology specialist delivered fiscal 2025 second-quarter revenues of $568 million, representing 19% year-over-year growth driven entirely by commercial demand.
The company’s NET launch achieved leading market share in just months while maintaining robust growth in the established RCC franchise.
Exelixis demonstrates disciplined capital allocation under CEO Mike Morrissey and CFO Chris Senner. The company maintains profitability, generates substantial free cash flow, and executes strategic share repurchases while investing approximately $1 billion annually in R&D.
In the last 10 years, EXEL stock has returned more than 600% to shareholders. Here’s why Exelixis stock could provide substantial returns through 2028 as it capitalizes on franchise expansion opportunities while advancing zanzalintinib toward multiple approvals.
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What the Model Says for Exelixis Stock
We analyzed the upside potential for Exelixis stock using valuation assumptions based on its commercial execution capabilities and pipeline advancement opportunities across established and emerging oncology indications.
Analysts recognize a significant opportunity for Exelixis given its proven commercialization track record, strong balance sheet position, and systematic approach to building sustainable competitive advantages through data-driven development and targeted market expansion.
The company’s dual-franchise strategy provides multiple growth vectors. Cabozantinib continues gaining share in RCC while the NET launch exceeds expectations. Zanzalintinib’s positive Phase III colorectal cancer results validate the next-generation TKI approach.
Based on estimates of 11.5% annual revenue growth, 39% operating margins, and a normalized P/E valuation multiple of 15x, the model projects Exelixis stock could rise from $40/share to $61/share.
That would represent a 54% total return, or 22% annualized return over the next 2.2 years.
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Our Valuation Assumptions
TIKR’s Valuation Model lets you plug in your own assumptions for a company’s revenue growth, operating margins, and P/E multiple, and calculates the stock’s expected returns.
Here’s what we used for EXEL stock:
1. Revenue Growth: 11.5%
Exelixis delivered an outstanding Q2 performance with 19% revenue growth driven by continued RCC market share gains and the successful NET indication launch.
Growth drivers include maintaining leadership position in RCC, where cabozantinib captured 45% TKI market share, expanding NET revenues from the 35% new patient share achieved in initial launch quarters, and advancing zanzalintinib through multiple Phase III programs.
Exelixis provided aspirational guidance targeting $3 billion in cabozantinib revenues by 2030, requiring approximately 10-11% compound annual growth from current levels.
Management highlighted that Q2 growth came entirely from commercial demand with minimal clinical trial sales and significant gross-to-net headwinds from increased 340B volume.
We used an 11.5% forecast, reflecting Exelixis’ ability to execute commercial launches while maintaining pricing discipline and expanding into underserved indications with limited competition.
2. Operating Margins: 39%
Exelixis demonstrates strong operational leverage with Q2 operating expenses of $355 million declining sequentially despite ongoing R&D investments and NET launch activities.
It maintains discipline through a committed $1 billion annual R&D cap, allowing management to prioritize high-return opportunities while generating substantial free cash flow for share repurchases and business development.
EXEL targets sustainable margin expansion through continued commercial execution in high-margin oncology franchises, operational leverage as revenues scale, and strategic resource allocation away from lower-probability programs like the discontinued STELLAR-305 head and neck trial.
CFO Chris Senner emphasized the company’s philosophy of “running it like a business, not a biotech,” focusing on rigorous capital allocation decisions and maintaining profitability while investing in growth.
3. Exit P/E Multiple: 15x
Exelixis stock trades at reasonable multiples reflecting its established commercial franchise, strong balance sheet, and advancing pipeline opportunities across multiple high-value indications.
We maintain a conservative 15x exit multiple, considering several key factors. The company’s current NTM P/E of 14.3x sits below historical averages of 16.4x over one year, 17x over three years, and 20.1x over five years. This suggests potential multiple expansion as pipeline catalysts materialize.
However, we apply conservative assumptions recognizing execution risks in late-stage development, competitive dynamics in oncology, and the eventual patent expiration for cabozantinib in 2030-2031.
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What Happens If Things Go Better or Worse?
Different scenarios for EXEL stock through 2030 show varied outcomes based on execution across commercial and clinical milestones: (these are estimates, not guaranteed returns):
- Low Case: Zanzalintinib development setbacks and cabozantinib competition → 11% annual returns
- Mid Case: Successful NET expansion and zanzalintinib CRC approval → 22% annual returns
- High Case: Multiple zanzalintinib approvals and sustained cabo growth → 32% annual returns
Even in the conservative scenario, Exelixis offers attractive risk-adjusted returns supported by an established profitable franchise, a strong balance sheet with $1.4 billion in cash, and multiple pipeline opportunities.
The upside case could deliver exceptional performance if zanzalintinib achieves approvals across colorectal cancer, non-clear cell RCC, and neuroendocrine tumors while cabozantinib maintains market leadership through patent expiration.
For investors seeking exposure to proven biotech execution with multiple catalysts, Exelixis warrants serious consideration as a core oncology holding with 54% upside potential through 2027.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!