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Exelixis (EXEL) to Report Q1 Earnings: What's in Store?

Zacks Equity Research

Exelixis, Inc. EXEL is scheduled to report first-quarter 2019 results on May 1, after the market closes.

The company’s shares have surged 40.4% in the past six months against the industry’s decline of 3.9%.

 

Exelixis has an excellent earnings surprise history, surpassing expectations in the trailing four quarters with an average beat of 95.43%.  In the last reported quarter, the company beat expectations by 48%.

Let’s see what is in store for this quarter.

Factors Likely to Impact Results

Strong Cabometyx sales boosted the company’s fourth-quarter 2018 results and we expect the momentum to continue in the first quarter as well. Exelixis experienced a 10% increase in Cabometyx’s prescriber base in the fourth quarter and similar increases are expected in the quarter to be reported.

While the FDA approved Cabometyx tablets in April 2016 for the treatment of advanced renal cell carcinoma (“RCC”), the drug’s label was also expanded in December 2017 for the treatment of previously-untreated, advanced RCC. Since the drug is now approved for first-line RCC as well, the company can now cater to the entire patient population suffering from the disease. In addition, the approval will broaden the geographic reach of the drug, as the market potential is significantly high for the first-line treatment of kidney cancer.

The broad label should drive market share gains further in the first quarter.

Moreover, the drug is now approved both in Europe and the United States for the treatment of hepatocellular carcinoma (HCC) in adults, who have previously been treated with Bayer’s Nexavar.  We expect sales to further improve with an increase in the eligible patient population for Cabometyx in the first quarter.

Meanwhile, investors are expected to focus on pipeline development. Three pivotal trials — CheckMate 9ER, evaluating Cabometyx in combination with Bristol-Myers BMY’s Opdivo in first-line RCC; COSMIC-311 with single agent cabozantinib in second-line DTC; and COSMIC-312, evaluating Cabometyx in combination with Tecentriq in first-line HCC — are underway.

Apart from Cabometyx, Exelixis has other sources of revenues. In January 2019, partner Daiichi Sankyo announced that Minnebro (esaxerenone) tablets were approved by the Japanese Ministry of Health, Labour and Welfare as a treatment for patients with hypertension. The compound was identified during the prior research collaboration between Exelixis and Daiichi Sankyo, and has been subsequently developed by the latter. Per the deal, Exelixis will receive a $20.0-million milestone payment upon the first commercial sale of Minnebro in Japan. The company is also eligible for additional commercialization milestone payments and low-double-digit royalties on sales of the compound.

Earnings Whispers

Our proven model does not conclusively show that Exelixis will beat on earnings 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 estimates. Unfortunately, that is not the case here, as you will see below.

Earnings ESP: Earnings ESP for Exelixis is -15.52%, as the Zacks Consensus Estimate is pegged at 25 cents and the Most Accurate Estimate at 21 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company carries a Zacks Rank #1, which is favorable. However, the negative ESP makes surprise prediction difficult.

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

Exelixis, Inc. Price, Consensus and EPS Surprise

 

Exelixis, Inc. Price, Consensus and EPS Surprise | Exelixis, Inc. Quote

Stocks to Consider

Here are some companies you may consider, as our model shows that these have the right combination of elements to deliver a beat this quarter.

Incyte Corporation INCY has an Earnings ESP of +14.47% and a Zacks Rank of 1. The company is scheduled to release first-quarter results on Apr 30, before the market opens. You can see the complete list of today’s Zacks #1 Rank stocks here.

GlaxoSmithKline plc GSK is scheduled to release results on May 1. The company has an Earnings ESP of +2.63% and a Zacks Rank #3.

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