Here’s Why This Growth Stock Is Already My 2022 Winner

Here’s Why This Growth Stock Is Already My 2022 Winner

As Thanksgiving approaches, 2022 is drawing to a close, and what a year the stock market had. the S&P 500 it is still down 21% so far this year. Most growth stocks have taken a beating this year. But amid this decline, some companies still shined, giving investors a glimmer of hope.

One of those companies is the manufacturer of oncology drugs. exĂ©lixis (NASDAQ:EXEL). Its flagship product has captured everyone’s attention. But the company has more in store to drive growth in the coming years. Here are a few reasons why this growth stock is my winner this year.

A person checking a patient using a stethoscope.

Image source: Getty Images.

Exelixis had another outstanding quarter

Cancer drug Cabometyx (cabozantinib), Exelixis’ crown jewel, helped the company report another stellar quarter. This medication is used to treat advanced renal cell carcinoma (RCC) and other types of cancer. Also, it is used in combination with Bristol Myers Squibb’s Opdivo (nivolumab) to treat advanced RCC in patients who have not received any prior treatment.

In its third quarter, total revenue was up 26% year over year to $412 million. In the third quarter, Cabometyx only generated $361 million in revenue, or 88% of the total. Cometriq, a variation of Cabometyx used to treat thyroid cancer, also made a contribution of about $5.1 million during the quarter. Adjusted net income for the quarter increased 58% year over year to $102 million.

In addition, the company’s association with its non-US partners, Ipsen Pharma Y Takeda Pharmaceutical brought in $30.3 million in royalty income.

For the nine months ending September 30, Cabometyx generated $1 billion in revenue.

Despite the success of its flagship product, Exelixis shares have fallen 9% this year. Investors worry that the company’s reliance on a single product will limit its growth. Fortunately, the company is aware of the problem. Management is optimistic about its next compounds: XL092, XB002 and XL102.

These drug candidates could bring some positive news next year, according to management. Revenue for the full year is expected to be in the range of $1.5 billion to $1.6 billion.

Is this stock worth taking the risk?

To be sure, biotech companies are risky because clinical trials may fail or regulatory approvals may be delayed, negatively impacting stock performance. However, Exelixis has already shown its value through the use of gene therapies to treat difficult-to-treat cancers.

Although oncology is a competitive field, it is also the fastest growing, with plenty of room to function. This market could grow at a CAGR of 8%, reaching $536 billion by 2029. Exelixis already has a successful drug in its pipeline, which will continue to contribute to revenue growth as it undergoes clinical trials for use as combination treatment. But the drugmaker also has many potential products in development that could succeed in the years to come.

Meanwhile, the balance sheet appears to be in good shape. Exelixis ended the quarter with cash and cash equivalents of $2.1 billion that could help fund its growing portfolio.

A consensus of Wall Street analysts sees the stock as a strong buy and predicts a 55% rise in price over the next 12 months, according to TipRanks. Even a small investment in this biotechnology Stocks could produce huge returns in the long run.

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Sushre Mohanty has no position in any of the mentioned stocks. The Motley Fool has stalls and recommends Bristol Myers Squibb. The Motley Fool recommends Exelixis. The Motley Fool has a disclosure policy.

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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