Telix’s (ASX:TLX) March-quarter precision medicine sales grew 16% on December 2025 to USD 186 million. Total revenue was USD 230 million. The firm reiterated 2026 revenue guidance of USD 950 million-USD 970 million and research and development spending of USD 200 million-USD 240 million. Shares rose 5%.

Why it matters: Telix is on track to meet our 2026 revenue forecast of USD 960 million, which we leave unchanged. Growth in core prostate cancer imaging continues to underpin performance, and we expect momentum to persist alongside a successful 2026 launch of its pipeline product Pixclara.

  • Pixclara’s regulatory filing has already been submitted in Europe, and the US now follows. While product pipeline progress continues—including previously announced positive safety data for its prostate cancer therapy candidate TLX591—we do not see these as material to our valuation.
  • Illuccix is the core driver. The product pipeline contributes just 10% of our intrinsic valuation, with Pixclara and Zircaix competing for smaller markets than Illuccix. Even if TLX591 passes the upcoming efficacy study and receives approval, it would add just 6% to our fair value estimate.

The bottom line: We maintain our AUD 18 fair value estimate for no-moat Telix Pharmaceuticals. Shares are undervalued at current prices. We think the market is less optimistic than us about margin expansion following elevated marketing, R&D, and manufacturing costs.

  • We expect EBIT margins to expand to 29% by midcycle. Our forecast group margin expansion is driven by R&D expense decreasing to 14% of revenue at midcycle, from an estimated 24% in 2026 and up from 21% in 2025 due to near-term product launches.
  • All else equal, we’d have to assume 20% EBIT margins in perpetuity to justify the share price. We are more optimistic than the market, as we see R&D costs related to trials, patient recruitment, and commercial launches rolling off and Telix leveraging its bolstered manufacturing and distribution.

Long-Term View Unchanged Despite Telix’s Near-Term Cost Growth

Telix’s strategy revolves around expanding its Illuccix distribution and investing in its product pipeline. Illuccix launched in April 2022 and was the second commercially available PSMA imaging agent for prostate cancer. It has gained significant market share due to changes in clinical practice and successful distribution. Currently, Illuccix is mainly used for staging suspected metastatic prostate cancer, which determines how far the cancer has spread beyond the prostate. If the cancer is in the early stage, this may be redundant. The adoption of Illuccix is also growing for suspected recurrence, monitoring, and patient selection for radioligand therapy. Telix has several distribution partners, including Cardinal Health, who operate the largest radiopharmaceutical network in the US and effectively distribute Illuccix to PET imaging sites.

The firm invests heavily in research and development. In the near term, the company aims to receive regulatory clearances for two new imaging agents, Zircaix for kidney cancer and Pixclara for brain cancer. Zircaix targets a cell-surface antigen expressed in clear cell renal cell cancer, or ccRCC, but absent from normal kidney tissues. Telix received exclusive global rights for Zircaix from Wilex in 2017. Pixclara aims to differentiate pseudoprogression from true progression in gliomas, or brain tumors, in a single scan. The current standard of care is multiple magnetic resonance imaging scans.

The firm is conducting various clinical trials, the most significant being TLX591. We anticipate an interim readout of its phase 3 trial in 2026 and a potential launch by 2029 after assessment of final results, preparation for lodgment, and receipt of regulatory approvals. Novartis’ Pluvicto was the first targeted radioligand therapy for PSMA-positive metastatic prostate cancer to receive regulatory approval in March 2022. However, Telix estimates the cost to manufacture TLX591 to be 20% of Pluvicto’s cost due to the latter’s wasted radiation. TLX591 is more targeted and only needs a fraction of Lutium-177, which affects radiation waste and patient management.

Bulls Say

  • Illuccix has gained significant market share due to changes in clinical practice and successful distribution.
  • The company requires minimal capital and is expected to generate very high returns as it continues to expand its distribution.
  • Telix aims to receive approvals for additional radiopharmaceuticals for use in prostate, renal, and brain cancer.

Bears Say

  • There is high uncertainty on the continued success of Illuccix and timing and adoption of its product pipeline.
  • There appears to be no significant switching costs for doctors to adopt competing products.
  • Average selling prices of Illuccix are under pressure after its transitional pass-through payment status expired in 2025.

Get Morningstar insights in your inbox

Terms used in this article

Star Rating: Our one- to five-star ratings are guideposts to a broad audience and individuals must consider their own specific investment goals, risk tolerance, and several other factors. A five-star rating means our analysts think the current market price likely represents an excessively pessimistic outlook and that beyond fair risk-adjusted returns are likely over a long timeframe. A one-star rating means our analysts think the market is pricing in an excessively optimistic outlook, limiting upside potential and leaving the investor exposed to capital loss.

Fair Value: Morningstar’s Fair Value estimate results from a detailed projection of a company’s future cash flows, resulting from our analysts’ independent primary research. Price To Fair Value measures the current market price against estimated Fair Value. If a company’s stock trades at $100 and our analysts believe it is worth $200, the price to fair value ratio would be 0.5. A Price to Fair Value over 1 suggests the share is overvalued.

Moat Rating: An economic moat is a structural feature that allows a firm to sustain excess profits over a long period. Companies with a narrow moat are those we believe are more likely than not to sustain excess returns for at least a decade. For wide-moat companies, we have high confidence that excess returns will persist for 10 years and are likely to persist at least 20 years. To learn about finding different sources of moat, read this article by Mark LaMonica.