Exelixis, Inc. (EXEL): A Bull Case Theory

We came across a bullish thesis on Exelixis, Inc. on Business Invest’s Substack by Francesco Ferrari. In this article, we will summarize the bulls’ thesis on EXEL. Exelixis, Inc.’s share was trading at $44.08 as of January 13th. EXEL’s trailing and forward P/E were 18.52 and 15.24 respectively according to Yahoo Finance.

Exelixis (EXEL) is a biopharmaceutical company focused on the discovery, development, and commercialization of oncology therapies, with a clear emphasis on durable growth and capital efficiency. The company’s core value driver is Cabometyx, a flagship cancer drug approved across multiple kidney and liver cancer indications, which continues to generate strong, recurring cash flows while funding a deep and expanding pipeline of experimental oncology treatments.

This combination of a mature, high margin commercial product and a broad pipeline positions Exelixis as an aggressive quality growth name within the healthcare and biotech sector, rather than a binary, early-stage biotech story.

Financially, Exelixis exhibits highly resilient and anti fragile characteristics that set it apart from many peers. Over the past three years, the company has delivered revenue growth of 11.8% on a compound annual basis, supported by an exceptional gross margin of 96.6%. This cost structure translates into strong profitability and a free cash flow margin of 34.1%, highlighting the scalability of its business model.

Return on invested capital stands at a robust 23%, underscoring management’s ability to deploy capital efficiently while generating attractive returns. The absence of material interest expense further strengthens the balance sheet and preserves financial flexibility for continued R&D investment and shareholder returns.

A reverse discounted cash flow analysis suggests that current market expectations remain reasonable rather than overly optimistic. Assuming a sentiment multiple of 15x cash flows, modest annual buybacks of 1%, and profit margins stabilizing around 33%, Exelixis would need to compound revenue at approximately 9% per year to achieve a targeted 15% annual return.

Given that the company has already grown revenues by roughly 12% annually over the past three years, this implied growth hurdle appears achievable. Overall, Exelixis offers a compelling blend of established cash generation, disciplined capital returns, and long term oncology growth optionality.

Previously, we covered a bullish thesis on Bio-Techne Corporation (TECH) by scuttleblurb in May 2025, which highlighted the strength of its legacy protein franchises, expanding diagnostics platform, and long term growth optionality in cell and gene therapy. TECH’s stock price has appreciated by approximately 38.45% since our coverage. This is because improving organic growth and stabilization in the instruments validated parts of the thesis. Francesco Ferrari shares a similar bullish sentiment for EXEL, emphasizing its capital efficiency, strong balance sheet, and presents the company as a long-term compounder.

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Disclosure: None.