Exelixis (EXEL) PT Raised to $42 at Guggenheim

Guggenheim analyst Michael W. Schmidt raised the price target on Exelixis (NASDAQ: EXEL) to $42.00 (from $33.00) while maintaining a Buy rating.

The analyst commented: "After recently establishing clarity on Cabometyx ("cabo") LOE in 2030 (see our MSN ANDA decision research here), Street focus has shifted to understanding the potential path for additional value creation beyond Cabometyx which we believe currently provides a valuation floor in the low $30's. Here we provide a deep-dive analysis of the opportunity for late-stage pipeline asset zanzalintinib ("zanza", a multi-TKI) which in our view offers potential upside optionality in the context of low Street expectations. Overall, we are constructive on the early clinical profile for zanza and EXEL's development strategy in core competency solid tumor indications, although our outlook is balanced by some key outstanding questions, including: (1) whether zanza can replicate or potentially exceed the clinical profile of cabo shown in prior signal-finding clinical studies, and (2) whether Ph. I efficacy signals will translate to Phase III success over benchmarks in each respective target indication (given the mixed history for cabo in that respect). We think STELLAR-303 Ph. III topline results (along with lead-in STELLAR-001 CRC data at ASCO GI in Jan.) this year will be the first "domino" to fall and establish directional sentiment on subsequent Phase III opportunities in nccRCC, SCCHN, ccRCC, and NETs. Overall, we continue to see a favorable setup for the stock given the minimal value for zanza reflected in the stock at current levels and potential for meaningful potential upside (+30%) and only modest potential downside (5-10%) on data updates over the next 12 months, including additional data from the Ph. I STELLAR-001 / -002 studies. We are updating our model to include 40-60% PoS-adjusted estimates for zanza which we think could potentially generate ~$3.2Bn US peak sales conservatively on an un-adjusted basis in Phase III target indications. Our PT moves to $42/shr (from $33), and we maintain our BUY rating."

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