Exelixis, Inc. (NASDAQ:EXEL) just released its second-quarter report and things are looking bullish. Statutory earnings performance was extremely strong, with revenue of US$637m beating expectations by 37% and earnings per share (EPS) of US$0.77, an impressive 151%ahead of expectations. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Taking into account the latest results, Exelixis' 20 analysts currently expect revenues in 2024 to be US$2.05b, approximately in line with the last 12 months. Statutory earnings per share are predicted to jump 28% to US$1.57. In the lead-up to this report, the analysts had been modelling revenues of US$1.88b and earnings per share (EPS) of US$1.13 in 2024. There's been a pretty noticeable increase in sentiment, with the analysts upgrading revenues and making a massive increase in earnings per share in particular.

Althoughthe analysts have upgraded their earnings estimates, there was no change to the consensus price target of US$27.09, suggesting that the forecast performance does not have a long term impact on the company's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Exelixis analyst has a price target of US$35.07 per share, while the most pessimistic values it at US$18.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that Exelixis' revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 3.7% growth on an annualised basis. This is compared to a historical growth rate of 17% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 18% per year. Factoring in the forecast slowdown in growth, it seems obvious that Exelixis is also expected to grow slower than other industry participants.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Exelixis' earnings potential next year. They also upgraded their revenue estimates for next year, even though it is expected to grow slower than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that in mind, we wouldn't be too quick to come to a conclusion on Exelixis. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Exelixis going out to 2026, and you can see them free on our platform here..

You still need to take note of risks, for example - Exelixis has 1 warning sign we think you should be aware of.

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