Exelixis Stock (EXEL) Good Growth and Good Value in Q1 2025

Exelixis (NASDAQ: EXEL) has emerged as a standout performer in the healthcare sector, delivering exceptional financial results in Q1 2025. With robust revenue growth, significant earnings improvements, and a promising guidance, the company presents a compelling case for investors seeking both growth and value. In this article we will dive into Exelixis recent earnings, stock performance & valuation, growth potential, and the risks investor should consider.

About Exelixis

Founded in 1994, Exelixis is a biotechnology company based in Alameda, California. The company specializes in the discovery, development, and commercialization of novel therapies for cancer treatment. Exelixis's flagship products include CABOMETYX® (cabozantinib) tablets for advanced renal cell carcinoma and COMETRIQ® (cabozantinib) capsules for progressive, metastatic medullary thyroid cancer. Through strategic collaborations and a focus on targeted therapies, Exelixis has established itself as a key player in oncology drug development.

Exelixis Financial Performance

Exelixis Inc. delivered a robust financial performance in Q1 2025, reinforcing its reputation as a growth-driven and fundamentally sound biotechnology company. The company reported quarterly revenue of $555.45 million, representing a 30.62% increase from $425.23 million in Q1 2024. This strong top-line growth highlights the rising demand for Exelixis’s oncology therapies, particularly CABOMETYX®, along with increasing contributions from its expanding pipeline. Earnings per share (EPS) surged to $0.55, a remarkable 358.33% increase from $0.12 in the prior-year quarter, indicating improved operational efficiency.

Over the trailing twelve months (TTM), revenue rose 24.49% to $2.29 billion from $1.84 billion, and EPS increased 237.58% to $2.20 from $0.65. Free cash flow per share also improved significantly, climbing 219.32% to $2.81 from $0.88 a year earlier, underscoring Exelixis’s ability to effectively convert earnings into cash. The company’s profitability remains outstanding, with a gross profit margin of 96.78%, a net profit margin of 27.99%, and a free cash flow margin of 35.71%. Additionally, Exelixis demonstrates excellent efficiency with a return on assets of 18.05% and a return on equity of 30.22%, while maintaining a conservative balance sheet with a debt-to-equity ratio of just 0.09.

Over the past five years, Exelixis has grown its revenue at a 22% CAGR, net income at 51% CAGR, and free cash flow at 43.2% CAGR. This shows that Exelixis has been a strong performer in the past and is likely to continue performing well in the future.

Exelixis 2025 Financial Forecast

Looking ahead, analysts forecast continued growth, projecting 2025 revenue to reach $2.33 billion, up 7.4% from $2.17 billion in 2024 and EPS to rise to $2.24, a 27.54% increase from $1.76. The analyst consensus remains a 'Buy' rating, with a price target of $40.78, implying a downside of 3.8% from the current trading level. The highest target price is $56, suggesting a potential upside of 37.3%.

EXEL Stock Price Performance and Valuation

Exelixis's stock has exhibited exceptional performance over the past year, with the current share price at $42.39 reflecting a remarkable 107.6% gain, significantly outperforming the S&P 500’s 10.1% increase over the same period. However, over the past five years, the stock has gained 72.1%, which, while impressive, trails the S&P 500’s 96% growth during that timeframe, most likely because it was overvalue.

Despite the recent surge in price, valuation metrics suggest that Exelixis remains attractively priced. The company’s trailing twelve-month price-to-sales (P/S) ratio stands at 5.25, with a forward P/S of 4.96. Its trailing price-to-earnings (P/E) ratio is 19.24, and the forward P/E is slightly lower at 18.88. Additionally, the price-to-free cash flow (P/FCF) ratio is a compelling 14.08. Overall, these valuation figures point to a stock that, despite its impressive run, still offers solid value for long-term investors.

Based on FinChat data, if we look at the valuation over the past five years, Exelixis's forward P/S is above the average of 4.18, while its forward P/E is significantly below the average of 33.33 and the forward P/FCF is also significantly below the average of 22.19. This suggests that Exelixis may be undervalued, especially since it is still projected to grow its EPS by more than 20%.

Exelixis Growth Potential

Exelixis's growth prospects are bolstered by several factors.

• Strong Cabometyx Performance
  Cabometyx remains Exelixis’ primary growth driver, generating $510.9 million in revenue in Q1 2025, well above analyst estimates of $433.7 million and internal projections of $457.3 million. This strong performance reflects broad market adoption across approved indications such as advanced renal cell carcinoma and previously treated hepatocellular carcinoma. Its success is attributed to proven clinical efficacy, a favorable safety profile, and limited treatment alternatives for these challenging cancers.
  Cabometyx’s sustained growth highlights its potential for further market expansion as Exelixis seeks additional indication approvals and geographic reach. Acting as a tyrosine kinase inhibitor targeting multiple pathways involved in tumor growth and angiogenesis, Cabometyx shows promise for treating various solid tumors. Recent clinical trials indicate potential future label expansions, which could significantly increase the drug’s addressable patient population and revenue opportunities.
• Regulatory Approvals and Label Expansions
  Exelixis achieved a significant regulatory milestone in March 2025 with FDA approval of Cabometyx for treating adult and pediatric patients aged 12 and older with previously treated, unresectable, locally advanced, or metastatic well-differentiated pancreatic and extra-pancreatic neuroendocrine tumors. This marks Cabometyx as the first and only systemic treatment approved for previously treated neuroendocrine tumors regardless of tumor site, grade, somatostatin receptor expression, or functional status.
  This approval significantly expands Cabometyx’s addressable market by providing access to patients with limited treatment options. Neuroendocrine tumors, though rare, are increasingly recognized due to rising incidence and unmet medical needs. The broad label covers multiple tumor types and patient profiles, positioning Cabometyx as a potential standard-of-care therapy. As physicians adopt this new indication, it is expected to drive meaningful revenue growth for Exelixis.
• Improved Revenue Guidance and Future Projections
  Exelixis’ strong Q1 2025 results led management to raise full-year revenue guidance, reflecting confidence in sustained growth for the remainder of the year. Total revenues are now expected between $2.25 billion and $2.35 billion, up from the prior range of $2.15 billion to $2.25 billion. This $100 million midpoint increase underscores management’s belief in ongoing growth momentum and market opportunity capture.
  Net product revenues are also projected to rise to $2.05 billion–$2.15 billion, compared with earlier guidance of $1.95 billion–$2.05 billion. The revised outlook factors in a 2.8% U.S. price increase for Cabometyx effective January 1, 2025. This price adjustment highlights confidence in Cabometyx’s market position and value-based pricing acceptance. Maintaining or expanding market share despite price hikes demonstrates strong demand and validates the drug’s therapeutic value.

Risks to Consider

While Exelixis presents a compelling investment case, investor should be aware of potential risk.

• Dependence on Cabozantinib
  Exelixis derives over 90% of its revenue from cabozantinib-based products (CABOMETYX and COMETRIQ), making it highly dependent on this single molecule. Any decline in market acceptance, failure to maintain reimbursement coverage, or competitive pressures could significantly affect revenue. For example, competition from other tyrosine kinase inhibitors (TKIs) or alternative therapies could erode CABOMETYX’s market share in renal cell carcinoma (RCC) and hepatocellular carcinoma (HCC).
• Collaboration Partner Risks
  Exelixis relies heavily on collaborations with other biopharmaceutical companies for product development and commercialization, which carries risks such as partners terminating agreements or failing to comply. The company lacks control over partners’ resource allocation and timing, which may cause delays or stoppages in clinical trials or supply issues. Disputes, financial difficulties, regulatory failures, or partners’ failure to maintain intellectual property rights can further hinder progress and reduce collaboration revenues.
• Clinical Trial and Regulatory Risks
  Exelixis faces clinical trial and regulatory risks, as outcomes directly impact approvals and market potential. The CONTACT-02 trial for cabozantinib improved progression-free survival but lacked statistically significant overall survival benefits, reducing market estimates. Similarly, the failed COSMIC-313 trial for a kidney cancer triplet therapy prompted abandonment of FDA approval plans. Delays or negative results in ongoing trials, particularly for pipeline drugs like zanzalintinib, threaten future growth and revenue prospects.

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Conclusion

Exelixis Inc. stands out as a biotechnology company that combines robust financial performance with promising growth prospects. Its impressive Q1 2025 results, low valuation, and prudent financial management underscore its potential as a valuable addition to investment portfolios. While acknowledging inherent risks, the company's strengths position it favorably for long-term success in the dynamic oncology landscape.