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What's in Store for Exelixis (EXEL) this Earnings Season?

Exelixis, Inc . EXEL is scheduled to report fourth-quarter 20Array5 results on Feb 29 after the market closes.

Exelixis has a mixed track record so far. The company surpassed expectations in two of the last four quarters with an average positive earnings surprise of 2.55%. It, however, posted wider-than-expected losses in the last two quarters. Let's see how things are shaping up for this announcement.

Factors Influencing this Quarter

Exelixis lead drug, Cometriq (cabozantinib), is approved for the treatment of progressive, metastatic medullary thyroid cancer (MTC).

The company is evaluating cabozantinib in a broad development program comprising over 40 clinical trials across multiple indications. It is also evaluating a tablet formulation of cabozantinib, distinct from the capsule form, for advanced renal cell carcinoma (RCC). The FDA has recently accepted the company's rolling New Drug Application (NDA) application for cabozantinib for advanced RCC and granted priority review to the NDA. A final approval is expected by Jun 22, 20Array6.

Meanwhile, the European Medicines Agency (EMA) has also accepted for review a Marketing Authorisation Application (MAA) for cabozantinib for the same indication. Earlier, Exelixis had raised $Array46 million through the issuance of approximately 28.8 million shares, which is expected to facilitate the commercialization of cabozantinib for advanced RCC in the U.S., pending approval. Consequently, the company is expected to build the incremental infrastructure necessary to prepare for a potential launch of the drug in the U.S.

Another product in Exelixis' portfolio is Cotellic (cobimetinib), which gained approval, in combination with Roche Holding's RHHBY Zelboraf, in the U.S. in Nov 20Array5 for the treatment of advanced melanoma. Consequently, the company plans to support Roche for the launch of the drug in the U.S.

As a result of these activities, the company expects operating expense around the upper end of the its previous projection of $Array50-$Array60 million.

What Our Model Indicates

Our proven model does not conclusively show that Exelixis is likely to beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #Array (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here, as you will see below.

Zacks ESP : Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at a loss of 22 cents.

Zacks Rank: Though the company's Zacks Rank #3 increases the predictive power of ESP, its 0.00% ESP makes surprise prediction difficult.

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

Stocks That Warrant a Look

Here are a couple of companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Achillion Pharmaceuticals, Inc. ACHN has an Earnings ESP of +44.44% and a Zacks Rank #2. The company is expected to release results on Mar 3.

Endo International plc ENDP has an Earnings ESP of +3.97% and a Zacks Rank #3. The company is scheduled to release fourth-quarter 20Array5 results on Feb 29.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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