NEW YORK (TheStreet) -- Exelixis (EXEL - Get Report) shares are soaring 22.7% to $4.08 on Monday after it announced positive top of the line results for its phase 3 study in which the company's advanced melanoma drug treatment, cobimetinib, met its primary endpoint of a statistically significant increase in progression-free survival compared to patients who took another treatment, Zelboraf, alone.
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TheStreet Ratings team rates EXELIXIS INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate EXELIXIS INC (EXEL) a SELL. This is driven by a few notable weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, disappointing return on equity, weak operating cash flow and generally high debt management risk."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- EXELIXIS INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, EXELIXIS INC reported poor results of -$1.32 versus -$0.91 in the prior year. For the next year, the market is expecting a contraction of 18.2% in earnings (-$1.56 versus -$1.32).
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Biotechnology industry. The net income has significantly decreased by 66.8% when compared to the same quarter one year ago, falling from -$44.73 million to -$74.62 million.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Biotechnology industry and the overall market, EXELIXIS INC's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has decreased to -$72.09 million or 32.47% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 32.58%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 62.50% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- You can view the full analysis from the report here: EXEL Ratings Report