Based on Exelixis Inc’s (NASDAQ:EXEL) earnings update in June 2018, analyst consensus outlook appear cautiously subdued, with earnings expected to grow by 5.2% in the upcoming year relative to the higher past 5-year average growth rate of 17.0%. Presently, with latest-twelve-month earnings at US$323.0m, we should see this growing to US$339.7m by 2019. Below is a brief commentary on the longer term outlook the market has for Exelixis. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
How is Exelixis going to perform in the near future?
The 9 analysts covering EXEL view its longer term outlook with a positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To reduce the year-on-year volatility of analyst earnings forecast, I’ve inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.
This results in an annual growth rate of 20.7% based on the most recent earnings level of US$153.9m to the final forecast of US$260.2m by 2021. This leads to an EPS of $1.71 in the final year of projections relative to the current EPS of $0.52. Growth in earnings appears to be a result of cost-cutting initiatives, since top-line is predicted to rise at a slower pace than earnings. However, the near term margin expansion is expected to shrink heading into 2021, from the current levels of 34.0% to 31.1%.
Future outlook is only one aspect when you’re building an investment case for a stock. For Exelixis, there are three fundamental factors you should look at:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is Exelixis worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Exelixis is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Exelixis? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.