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What's in the Offing for Exelixis (EXEL) in Q3 Earnings?

Exelixis, Inc. EXEL is scheduled to report third-quarter 2017 results on Nov 1, after market close.

Exelixis’ track record is outstanding. The company has surpassed expectations in the trailing four quarters, with an average of 543.6%.

 

Exelixis’ share price has increased 15.7% in the last six months compared with the industry’s loss of 0.1%.

Factors Likely to Impact Results

Exelixis received a major boost with the FDA’s approval of Cabometyx tablets in April 2016 for the treatment of advanced renal cell carcinoma (RCC).

The drug’s uptake was encouraging and is expected to propel the top line in the forthcoming quarters. Moreover, Cabometyx was also approved in the EU.

New patient starts, refills for patients already on therapy and continued expansion of the prescriber base for Cabometyx are driving the drug’s sales. Meanwhile, Exelixis is developing cabozantinib in a broad development program and has submitted a supplemental New Drug Application (sNDA) for advanced RCC. The FDA assigned a PDUFA action date of Feb 15, 2018. A potential label expansion of Cabometyx will significantly boost the growth prospects.

During the first quarter, Exelixis inked agreements with The Bristol-Myers Squibb Company BMY and Roche Holding AG RHHBY to develop abozantinib in combination with immunotherapy agents. Exelixis and Bristol-Myers initiated a phase III trial, CheckMate 9ER, in July.

Exelixis also initiated the dose-escalation stage of a phase Ib trial of cabozantinib in combination with Tecentriq. The drug will be evaluated in patients suffering from locally advanced or metastatic urothelial carcinoma (UC) or RCC.
These collaborations allow Exelixis to earn milestone payments and royalties that boost its top line.

However, expenses continue to increase. Exelixis expects total costs and operating expenses for 2017 in the range of $290-$310 million.

Earnings Whispers

Our proven model does not conclusively show that Exelixis is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) to be able to beat earnings. That is not the case here as you will see below.

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is -10.82% since the Most Accurate is 7 cents while the Zacks Consensus Estimate is pegged at 8 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Exelixis carries a Zacks Rank #2 which is favorable. However, this when combined with a negative ESP makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 and #5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stock to Consider

Here is one company that you may consider, as our model shows that it has the right combination of elements to post an earnings beat this quarter.

Incyte Corporation INCY has an Earnings ESP of +40.11% and a Zacks Rank #3. The company is expected to release results on Oct 31.  You can see the complete list of today’s Zacks #1 Rank stocks here.

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Roche Holding AG (RHHBY): Free Stock Analysis Report
 
Bristol-Myers Squibb Company (BMY): Free Stock Analysis Report
 
Incyte Corporation (INCY): Free Stock Analysis Report
 
Exelixis, Inc. (EXEL): Free Stock Analysis Report
 
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