BMO initiates Exelixis stock at Market Perform, cites patent cliff

BMO Capital initiated coverage on Exelixis Inc. (NASDAQ:EXEL) on Tuesday, assigning a Market Perform rating and setting a price target of $54.00. The company's main product, cabozantinib, has generated about $2.12 billion in fiscal year 2025. BMO Capital highlighted the franchise as durable, high margin, and cash generating, with a 96% gross profit margin and a 9% free cash flow yield.

However, the firm warned of a patent cliff ahead in early 2030 for cabozantinib, as the follow-up drug zanzalintinib is not yet fully de-risked. BMO Capital prefers to wait for further developments before making a move. Meanwhile, Exelixis reported better-than-expected earnings for Q2 2026, but lowered its full-year revenue guidance due to a slower-than-anticipated ramp-up in its NET business.