Stock (Symbol) |
Celgene (CELG) |
Stock Price |
$106 |
Sector |
| Healthcare |
Data is as of |
| June 2, 2016 |
Expected to Report |
| Jul 21 – Jul 25 |
Company Description |
 Celgene Corporation (Celgene), together with its subsidiaries, is an integrated biopharmaceutical company engaged primarily in the discovery, development and commercialization of therapies for the treatment of cancer and inflammatory diseases through gene and protein regulation. The Company’s primary commercial stage products include REVLIMID (lenalidomide), ABRAXANE, POMALYST/IMNOVID, VIDAZA, azacitidine for injection (generic version of VIDAZA), THALOMID (sold as THALOMID or Thalidomide Celgene outside the United States), OTEZLA (apremilast) and ISTODAX (romidepsin). Celgene is involved in research in a range of scientific areas designed to deliver therapies, targeting areas, including intracellular signaling pathways, protein homeostasis and epigenetics in cancer and immune cells, immunomodulation in cancer and autoimmune diseases, and therapeutic application of cell therapies. Source: Thomson Financial |
Sharek’s Take |
 Shares of Celgene (CELG) are lower then they were a year ago even though profit growth has averaged 26% a qtr during the last year. The stock performance can be blamed on Biotech sector, which has been weak for much for the past year because of slowing industry growth. But CELG is still growing rapidly, and should be back to its winning ways shortly as the company has perhaps the best long-term pipeline with multiple drugs set to launch in the coming years. It’s top-selling drug is Revlimid, which treats multiple myeloma, comprises 2/3rd of total sales and is growing at a double-digit rate. Last year CELG acquired Receptos, which has a drug Ozanimod in Phase 3 trials that could be better than the top MS drug on the market. Receptos could boost Celgene’s sales from $9 billion a year to $15 billion. Additionally, Ozanimod might also be effective against ulcerative colitis, Crohn’s disease, lupus or psoriasis. This stock has gone trough sluggish periods in the past, so this is nothing new. The company projects to make $7 in profits next year, and if it does so even a P/E of 20 would net a $140 stock. This stock has great long-term appeal but in the short-term it might not do much. |
One Year Chart |
 Last qtr CELG produced 23% profit growht on a 21% increase in sales. The company beat the street, but the negative was 2017 earnings estimates fell from $7.23 to $7.00. Looking ahead, proftis are expected to grow 12%, 19%, 30% and 16% the next four qtrs. The P/E of 19 is great considering Celgene’s history of growing profits each year and the Est LTG is 22%. The stock is just in a slump right now. |
Fair Value |
 Celgene went through a period of sluggish stock growth in 2011 and 2012 when it sold for around 14-15 times earnings. Then the stock perked up and the P/E went to 25. Now the P/E is in the teens again. My Fair Value is 25x earnings, which equates to a $142 Fair Value this year and $175 next year. Note annual estimates have been on a slight decline for the past year, thus my Fair Values have been coming down a bit as well. |
Bottom Line |
 Celgene has a robust pipeline which should fuel solid sales and profit growth for at least the next 3-5 years. The stock is also on sale, and carries good long-term upside. Celgene is a conservative stock, and management buys back shares, and those are two more pluses. The biggest risk is a Hillary Clinton Presidential victory could be detrimental to drug pricing. In my Power Rankings CELG ranks 12th in the Growth Portfolio, 12th in and Aggressive Growth Portfolio and 1st the Conservative Stock Portfolio. |
Power Rankings |
Growth Stock Portfolio
12 of 39Aggressive Growth Portfolio 12 of 16Conservative Stock Portfolio 1 of 37 |
