Buffett Brain · Research note
Score updated 22 Oct 2026 · analysis from 6 Oct 2026
EXEL· Healthcare
Exelixis
Exelixis' 35% ROIC and 96% gross margin signal a strong moat, but valuation at 15.5 P/E needs scrutiny for growth assumptions.
Buffett fit
Partial fit
Owner
72
Durability
85
Management
96
Price
69
Score updated 22 Oct 2026 · analysis from 6 Oct 2026
Buffett's checklist
Each number against Buffett's bar, and where it ranks among Healthcare stocks in our database.
How much profit the business makes on each dollar invested in it. Higher is better.
What is left of each sale after the cost of making the product. A high number often means pricing power.
The cash the business earns for its owners, compared with the price of the whole company.
How fast sales grew each year over the last five years.
How many years of today's profit you pay for at today's price. Lower means cheaper.
How much the company owes compared with what it owns outright. Lower is safer.
The four pillars
How the business measures up on each of Buffett's four tests.
Owning 100% of Exelixis, we'd focus on sustaining the high of 35% and leveraging the of 96.4% to fund further R&D and potential acquisitions.
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Exelixis appears durable with a 5-year EPS CAGR of 40.93% and consistent profitability.
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Exelixis has effectively used retained earnings, with a market cap increase of 39.26% compared to retained capital.
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The yield of 6.72% is below the 8-10% range we prefer for a .
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- The 5-year price target and the return it implies
- What would change the call
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For and against
The strongest points on each side, with the numbers behind them.
In its favor
8- 1 of 35% is top-quintile in healthcare, indicating efficient capital use.
- 2 of 96.4% suggests strong and cost control.
- 3 of 39.4% is well above the sector's top-quintile cutoff of 16.2%.
- 4Net margin of 35.1% underscores profitability and effective management.
Concerns
8- 1 of 15.5 requires validation of continued high growth.
- 2 yield of 6.72% is below the preferred safety margin.
- 3Complexity in biotechnology could lead to unforeseen challenges.
- 4Heavy reliance on oncology drugs exposes the firm to competitive pressures.
Price history
$64.58+201.8%· 5-year return
Weekly closing prices. Touch or hover the line for a date.
The business
How the business works
Exelixis generates cash by developing and commercializing oncology drugs, primarily CABOMETYX and COMETRIQ, which target multiple tyrosine kinases. Revenue is driven by these high-margin products, with a of 96.4% indicating strong profitability. The company's revenue of $2.32 billion and net income of $782.57 million reflect effective cost management and strong product demand. Unit economics are robust, with a net margin of 35.1%, showcasing and operational efficiency.
How this analysis has moved
The call has held across 3 reviews.
Oct 11, 2026 → Oct 22, 2026
What other investors would say
The same company, judged by three other documented playbooks.
Keep researching
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