The Risk/Reward Potential For Exelixis Has Balanced As Catalysts Loom

Deutsche Bank analyst Andrew Peters downgraded shares of Exelixis, Inc (NASDAQ: EXEL) on Thursday, while raising his price target from $26 to $29.

The company had been Deutsche Bank’s top pick since initiating coverage on the biotech sector last year.

The downgrade wasn't a result of downsides ahead though, Peters sees Exelixis “as an undisputed success story in biotech.” Instead, the company is simply lack new catalysts.

The data from CELESTIAL's Phase 3 trial will be available later this year and the combination of cabozantinib and I/O agents could prove to be differentiating, but the Peters’ price target already accounts for significant upside from both.

The next de-risking events for the programs are expected to be over a year away.

Exelixis is “one that we believe will continue to garner strategic interest,” said Peters, but investors shouldn’t expect any near-term gains.

The company reported EPS and sales for the second quarter above consensus estimates, but share price gains were short lived, with the stock having dropped 5.7 percent from its intraday high — from $27.38 to $25.85.

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