Exelixis Inc (NASDAQ:EXEL): A Strong Growth Stock with Bullish Technical Setup

The strategy of finding strong growth stocks with good technical setups blends fundamental strength with timely price movements, providing a two-part method for potential investments. Growth stocks are typically expected to perform better than their peers in revenue and earnings growth, but combining this with a technical breakout pattern can highlight a good entry point. This approach looks for companies showing strong financial health, profitability, and fast growth, qualities that suggest long-term stability, while also displaying bullish chart patterns that reflect market momentum.

Exelixis Inc (NASDAQ:EXEL) fits this model, making a strong case as a growth stock with a technical setup worth watching. Below, we explain why EXEL meets these standards.

Fundamental Strength: Growth, Profitability, and Financial Health

Exelixis, a biotech company focused on oncology, performs well across key fundamental measures:

• Growth (Rating: 8/10):

  • Revenue has increased at an average yearly rate of 17.51% over the past five years, with a 10.73% rise in the most recent year.
  • Earnings per share (EPS) jumped 67.74% year-over-year, and analysts forecast 25.80% annual EPS growth in the coming years.
  • The company’s pipeline, including its main drug cabozantinib and experimental asset zanzalintinib, supports further growth in the oncology market.

• Profitability (Rating: 8/10):

  • Exelixis has top-tier margins, including a 33.71% operating margin and 27.01% profit margin, beating 96-98% of biotech competitors.
  • Return on equity (ROE) is 29.62%, showing efficient use of capital.

• Financial Health (Rating: 9/10):

  • The company carries no debt, with a strong current ratio of 3.51 and plenty of liquidity.
  • Its Altman-Z score of 11.66 indicates very low bankruptcy risk, placing it among the most stable biotech firms.

These fundamentals match the growth investing approach described in our introductory article, where steady expansion, strong margins, and a solid balance sheet are key for long-term success. For more details, see Exelixis’ full fundamental analysis report.

Technical Setup: Consolidation and Breakout Potential

While Exelixis’ long-term technical trend is down, recent price movements hint at a possible turnaround or breakout:

• Setup Rating (7/10):

  • The stock has formed a bear flag pattern, which can signal either a continuation or a reversal if support holds.
  • Key support areas are between $36.90–$37.77 (backed by moving averages and trendlines) and $36.17–$36.25. Holding above these levels could lead to upward movement.
  • Resistance is near $38.32–$38.50. A move above this zone, with higher volume, could indicate a shift in sentiment.

• Market Context:

  • EXEL has lagged the S&P 500 lately but remains 45% higher year-over-year, showing underlying strength.
  • Lower volatility and consolidation near support suggest a possible turning point.

The technical outlook, though mixed, presents a clear risk-reward scenario. Traders may watch for a breakout above resistance with volume confirmation, as outlined in the technical analysis report.

Why This Combination Matters

Growth stocks with technical breakouts can provide high-confidence entry points because:

1. Fundamentals support the trend: Strong financials lower the chance of a false breakout.
2. Technical signals timing: Breakouts confirm the market’s recognition of growth potential.
3. Liquidity and momentum: EXEL’s average daily volume (~3.5M shares) ensures easy trading.

Finding More Opportunities

Exelixis is one of several stocks picked by this screening method. For more stocks showing strong growth fundamentals and technical setups, check the Strong Growth Stocks with Good Technical Setup Ratings screen.

Disclaimer: This article is not investment advice. Always conduct your own research or consult a financial advisor before making investment decisions.