On Friday, Exelixis, a pharmaceutical company specializing in cancer drugs, experienced a notable rise in its stock value. Market participants responded positively to a significant corporate action, driving the company’s stock up by 5%. This surge occurred despite a generally downward trend in the stock market, where the S&P 500 index declined by 1.7%.
Exelixis announced after the market closed on Thursday that it plans to initiate a new share repurchase program, which authorizes the buyback of up to $500 million worth of its common stock by December 31. This program will commence once the existing buyback plan, also limited to $500 million, has been completed. The company expects this current program to conclude in the second quarter of this year.
The forthcoming repurchase initiative will be the fourth of its kind for Exelixis. The last program was introduced in August 2024. The company has actively engaged in stock buybacks, spending over $1.2 billion on such initiatives by the end of 2024.
While stock repurchases are generally favorable in enhancing equity value by periodically re-entering the market, they should not be the sole reason for investing in a stock. Nevertheless, these actions are often perceived as a positive indication of a management team’s commitment.
Eric Volkman, the author of the article, has no financial interests in the stocks mentioned. The Motley Fool holds positions in and recommends Exelixis, and adheres to a disclosure policy.
