Following a large drug rights purchase and an informative Mobile World Congress, analysts provide updates and share their insights on Exelixis, Inc. (NASDAQ:EXEL) and NXP Semiconductors NV (NASDAQ:NXPI), respectively.
Cowen analyst Eric Schmidt provides an earnings update to Exelixis, a biotechnology stock that produces anti cancer therapies and medicine. Ipsen, a French pharmaceutical company, has recently acquired Exelixis’ US rights to Cabozantinib (Cabo), a drug used to slow tumor growth in cancer patients. Exelixis received a return of $200 million upfront, plus up to $650 million in potential milestones and a 22-26% tiered royalty.
Schmidt explains that Exelixis was looking for an ex-US partner to “commercialize the drug overseas, help offset expenses associated with Cabo’s US RCC (regulatory cooperation council) launch, and support future global development in new indications. Exelixis believes Ipsen will help them accomplish these objectives as Ipsen has a global footprint (operation in 115 countries) and a solid presence in GU oncology. The deal with Ipsen also includes rights to Cometriq, marketed for Thyroid cancer in the EU. Schmidt expects Cabo’s EU opportunity to be of “similar in size to the drug’s US opportunity (roughly $400 million) with higher patient numbers being offset by lower projected pricing.”
Further reports from Exelixis show that sales of Cometriq in Q4 2015 were $9.9 million (+33% Y/Y). Net losses from Q4 were $46.3 million vs estimated losses of $49 million. After the Ipsen deal Exelixis has pro forma cash of $453 million.
Eric Schmidt maintained an Outperform rating on Exelixis without specifying a price target.
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Eric Schmidt has a yearly average return of 13.1% and a 34% success rate. Schmidt is ranked #248 out of 3741 analysts.
NXP Semiconductors NV
Matthew Ramsay of Canaccord provides an update on NXP semiconductors NV after a meeting at the Mobile World Congress event in Barcelona. Ramsay reiterates a Buy rating and price target of $120 on the stock. In reaction to market volatility over the past few months, a “weakening market backdrop,” a “challenging channel inventory” situation, and a “surprisingly poor Q4/15 guidance,” NXPI shares have traded down to levels seen before the Freescale merger was announced at MWC in March 2015.
Ramsay explains that despite the recent price volatility, “We continue to believe NXP is fundamentally the best positioned mixed signal semiconductor firm long-term, regardless of market cap.” Further, he points out that the company’s product portfolios are “complementary” specifically in automotive and IoT, which should enable “cost synergies, pushing operating margin toward 30% once fully integrated.”
Following MWC, Ramsay highlights important takeaways for investors. He points out that the environment for sales for NXP in China is “not great” but is “not as bad as investors fear.” NXP management is monitoring distributors on a weekly basis and expects a “healthy channel exiting Q1/16” with parts of automotive radio and mobile MCU products being sold during Q1/16. Ramsay believes his targets will prove conservative despite a change in CFO during the Freescale merger process as NXP management remains committed to cost synergy targets of $200 million in 2016. Lastly, Ramsay writes that despite “often trading with the Apple supply chain, NXP’s total mobile concentration is ~10% of revenue with Apple only ~5% of sales.” He anticipates solid mobile growth outside of Apple in 2016/17 due to NXP’s new partnerships with Qualcomm and Xiaomi, which are both adopting NXP’s mobile payment solutions.
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Matthew. Ramsay has a yearly average loss of 11.8% and a 30% success rate. Ramsay is ranked #3590 out of 3741 analysts.