Exelixis, Inc.: A Beaten-Down Stock to Buy

This article highlights three beaten-down stocks to buy, Exelixis, Inc. (EXEL), Intercept Pharmaceuticals (ICPT) and Sage Therapeutics (SAGE).

Of the three, I featured Exelixis, Inc. in The GMD Weekly Commentary for Saturday, September 30, 2017.

#Biotech stocks that crater on negative clinical results or unfavorable regulatory developments can sometimes present outstanding investing opportunities.  It is possible that Exelixis is one such stock.

Exelixis, Inc. is a cancer drug maker.  Its shares took a sizable step backward last month after analysts downgraded the stock.  Meanwhile, some of the company’s management team decided to sell shares.  EXEL’s share price had risen 1,300% over the past three years.

However, a deeper dive suggests that EXEL probably isn’t overpriced.  The company’s main value drivers are Cabometyx/Cometriq and Cotellic.  And both of these drugs are in the early stages of their commercial launches.  Furthermore, analysts expect revenue from these drugs to climb by a strong 45.9% in just the next year.

Most noteworthy, the company enjoys a rapidly growing revenue stream and positive free cash flows.  As a result, these should open doors to other value creating activities.

All in all, Exelixis’ stock certainly isn’t cheap after its monstrous move northward.  Nevertheless, the premium may be worth it for a company that could eventually become a key player in the $100 billion-plus cancer drug market.

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