One-glance verdict
Undervalued
$38.37 our estimate vs market $25.03
Wall Street consensus: $31.25 (-18.6% lower than our fair-value estimate)
35% below our estimate, below the bear case
Fundamentals snapshot
Xencor, Inc.
XNCR · NGM · Healthcare · Biotechnology
Current price
$25.03
52-week range
$10.04 - $30.61
Market cap
$1.86B
Balance sheet
Healthy
-5.56x Concerning
Net cash $286.34M. Interest coverage shows how many times profit covers the interest bill.
What stands out
1 Reward
3 Risks
1 rewards · 3 risks
- Reward Free cash flow was positive in 2/10 years.
- Risk Return on equity was -29.1% last year — the company lost money on shareholders' equity.
- Risk Operating margin compressed from -50.1% to -72.4% over 3 years.
- Risk Insider ownership is only 1.2% (peer median: 3.5%).
What this company does
Xencor, Inc.
Xencor is a biotechnology company that develops engineered antibodies, which are special proteins designed to help the body fight cancer and diseases where the immune system attacks itself. The company earns money from a couple of approved drugs and from partnerships where larger drug companies pay to use Xencor's technology in their own medicines. This means the company's success depends on both its pipeline (the collection of drugs it is currently developing) and its ability to keep making these valuable partnership deals.
How the company got here
Xencor was founded in 1997 with a focus on improving how antibodies, which are proteins our bodies use to fight disease, can be used as medicines. The company developed a specialized technology platform called XmAb® to engineer or modify these antibodies to make them more effective. A key turning point was the company's initial public offering (IPO) in 2013, which provided the funding to advance its own drug candidates while also partnering with larger pharmaceutical companies. Over the years, Xencor has successfully licensed its XmAb® technology to numerous partners, leading to several approved and marketed drugs. This has established them as a leader in antibody engineering.
What it actually does
Think of Xencor as a high-tech design studio for medicines. They don't manufacture drugs you'd find at a pharmacy, but they create the blueprints for them using their XmAb® technology. This technology allows them to take existing antibodies and give them new abilities, like being able to fight cancer cells more effectively or staying in the body longer so a patient needs fewer doses. They then either develop these super-charged antibodies into their own potential new medicines or they license the technology to other drug companies to use in their own drug development.
Proprietary Drug Development
This part of the company focuses on creating and testing its own potential medicines for cancer and autoimmune diseases (illnesses where the body's immune system attacks its own tissues). Xencor is currently running clinical trials (studies in people) for several of its own drug candidates. If these trials are successful and a drug is approved, Xencor could sell it themselves or partner with a larger company to market and sell it. This is a long-term and expensive part of their business, but it has the potential for significant financial return if a drug is successful.
Platform Licensing and Partnerships
This is a major way Xencor currently makes money. They act like a technology provider to other, often larger, pharmaceutical and biotechnology companies. These partners pay Xencor for the right to use its XmAb® technology to improve their own drug candidates. The payments come in several forms: upfront fees, payments based on achieving specific development goals called milestones (for example, successfully completing a clinical trial), and royalties (a percentage of sales if a drug using their technology gets approved and is sold). This provides a steadier stream of revenue for the company.
What management is betting on now
The company's current strategy is to increasingly focus on developing its own pipeline of drugs, particularly for cancer and autoimmune diseases. They are investing heavily in their own clinical trials with the goal of bringing their own products to market. Management believes that their engineered antibodies can be superior to existing treatments. At the same time, they continue to leverage their XmAb® platform through new and existing partnerships to generate revenue that helps fund their own drug development efforts.
Price history
How the share price has moved
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Loading price history…
Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2024 Q3
$-27.29M
FY2024 Q4
$-57.24M
FY2025 Q1
$-17.66M
FY2025 Q2
$-36.75M
FY2025 Q3
$-31.00M
FY2025 Q4
$-52.85M
FY2026 Q1
$-68.24M
FY2026 Q2
$-56.20M
Revenue
$51.22M
Net income
$-21.73M
Diluted EPS
-0.29
Operating cash flow
$-55.66M
Free cash flow
$-56.20M
Fetching…
Sources
Revenue
$4.52M
Net income
$-128.92M
Diluted EPS
-1.71
Operating cash flow
$-67.63M
Free cash flow
$-68.24M
Fetching…
Sources
Revenue
$28.24M
Net income
$-6.65M
Diluted EPS
-0.09
Operating cash flow
$-51.71M
Free cash flow
$-52.85M
Fetching…
Sources
Revenue
$21.00M
Net income
$-6.03M
Diluted EPS
-0.08
Operating cash flow
$-30.82M
Free cash flow
$-31.00M
Fetching…
Sources
Revenue
$43.61M
Net income
$-30.82M
Diluted EPS
-0.41
Operating cash flow
$-36.37M
Free cash flow
$-36.75M
Fetching…
Sources
Revenue
$32.73M
Net income
$-48.42M
Diluted EPS
-0.66
Operating cash flow
$-16.22M
Free cash flow
$-17.66M
Fetching…
Sources
Revenue
$70.02M
Net income
$-53.48M
Diluted EPS
-0.69
Operating cash flow
$-55.58M
Free cash flow
$-57.24M
Fetching…
Sources
Revenue
$10.71M
Net income
$-45.14M
Diluted EPS
-0.71
Operating cash flow
$-26.02M
Free cash flow
$-27.29M
Fetching…
Sources
Is it cheap or expensive?
Fair value $38.37 vs current price $25.03
Wall Street consensus is the average analyst price target: $31.25 (-18.6% lower than our fair-value estimate).
Our most-likely fair value is $38.37 a share — about 53.3% above today's price of $25.03, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Healthy
Net cash $286.3M - more cash than debt. Interest coverage -5.6x.
Net debt
$-286.34M
Interest coverage
-5.56x
Xencor, Inc.'s profit covers its interest bill about 0.0 times over. which is weaker than most peers shown here and 4 peers sit below 1x, which is the danger zone where profit does not fully cover the interest bill.
Healthy
Worse cushion
Baseline
Better cushion
XNCR
BASELINE
Xencor, Inc.
Total debt $170.11M Interest coverage -5.56x This is the baseline the peer rows are being compared against.
Total debt $16.01M Interest coverage -6.93x Neither company has much profit cushion over interest right now.
Total debt $277.36M Interest coverage 0.60x This peer still has a real interest-payment cushion, while XNCR does not.
Total debt $135.62M Interest coverage -50.24x Neither company has much profit cushion over interest right now.
Total debt $35.09M Interest coverage -8.56x Neither company has much profit cushion over interest right now.
What you should know
The case for and against XNCR
1 Reward
3 Risks
Rewards
-
Free cash flow was positive in 2/10 years.
Risks
-
Return on equity was -29.1% last year — the company lost money on shareholders' equity.
-
Operating margin compressed from -50.1% to -72.4% over 3 years.
-
Insider ownership is only 1.2% (peer median: 3.5%).
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
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Forward P/E
-7.05x
P/B
3.70x
P/S
17.73x
EV/EBITDA
-7.65x
PEG ratio
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Profitability
How much profit each dollar creates
Gross margin
-143.6%
Operating margin
-72.4%
Net margin
-155.6%
ROE
-29.1%
ROA
-16.8%
Health
Liquidity and balance-sheet strength
Debt / equity
0.34x
Current ratio
6.39x
Quick ratio
6.09x
Total debt
$170.11M
Total cash
$456.45M
Growth
How the business has been compounding
Revenue TTM
$104.97M
Revenue 5Y CAGR
-17.8%
EPS TTM
-2.16
EPS 5Y CAGR
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Cash flow
How much cash the business throws off
Operating CF TTM
$-205.81M
Free CF TTM
$-138.27M
FCF margin
-131.7%
Dividend
Shareholder payout
Yield
—
Payout ratio
0.0%
Last ex-div date
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