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.
