There's been a notable change in appetite for Exelixis, Inc. (NASDAQ:EXEL) shares in the week since its annual report, with the stock down 13% to US$18.69. The result was positive overall - although revenues of US$968m were in line with what analysts predicted, Exelixis surprised by delivering a statutory profit of US$1.02 per share, modestly greater than expected. Analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether analysts have changed their mind on Exelixis after the latest results.
Taking into account the latest results, the current consensus, from the 13 analysts covering Exelixis, is for revenues of US$894.9m in 2020, which would reflect a measurable 7.5% reduction in Exelixis's sales over the past 12 months. Statutory earnings per share are expected to tumble 59% to US$0.43 in the same period. Before this earnings report, analysts had been forecasting revenues of US$891.2m and earnings per share (EPS) of US$0.71 in 2020. Analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a large cut to EPS estimates.
The consensus price target held steady at US$25.04, with analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Exelixis, with the most bullish analyst valuing it at US$35.00 and the most bearish at US$20.00 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
In addition, we can look to Exelixis's past performance and see whether business is expected to improve, and if the company is expected to perform better than wider market. These estimates imply that sales are expected to slow, with a forecast revenue decline of 7.5% a significant reduction from annual growth of 55% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same market are forecast to see their revenue grow 17% annually for the foreseeable future. It's pretty clear that Exelixis's revenues are expected to perform substantially worse than the wider market.
The Bottom Line
The biggest concern with the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Exelixis. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Exelixis's revenues are expected to perform worse than the wider market. The consensus price target held steady at US$25.04, with the latest estimates not enough to have an impact on analysts' estimated valuations.
With that in mind, we wouldn't be too quick to come to a conclusion on Exelixis. Long-term earnings power is much more important than next year's profits. We have forecasts for Exelixis going out to 2024, and you can see them free on our platform here.
We also provide an overview of the Exelixis Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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