Stock (Symbol) |
Celgene (CELG) |
Stock Price |
$118 |
Sector |
| Healthcare |
Data is as of |
| February 26, 2017 |
Expected to Report |
| Apr 26 – May 1 |
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 |
 The Biotech sector — measured by the Biotech ETF (IBB) — almost broke out today. It was actually at an All-TIme high but closed down a bit to finish pennies below the prior high set last September. A successful breakout by the sector would be great news for Celgene (CELG) as it could allow the stock to move higher as well. Celgene is my favorite Biotech stock as it has grown profits at least 20% a year each year during the past decade and should continue that growth well into the future as it is expected to have 18 Phase III trials between mid-2016 through mid-2018. Celgene’s top-selling drug is Revlimid, which treats multiple myeloma, comprises 2/3rd of total sales and is growing at a double-digit rate. The next blockbuster could be Ozanimod. In 2015 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 $11 billion a year to $15 billion. Additionally, Ozanimod might also be effective against ulcerative colitis, Crohn’s disease, lupus or psoriasis. CELG is a safe stock with an impressive Expected Long-Term Growth Rate of 22% a year. When Donald Trump was elected President the stock fell 10% but has since recovered after Trump met with CEOs of major Drug companies in late January. The recent movement of the stock and sector indicate to me Trump won’t be hard on drug companies (his words also suggest this, but the tape matters more). Biotechs have been in a rut for more than a year due to political concerns, and we could be on the verge of a significant move higher — if the sector does break out. Celgene has a P/E of just 16 and needs to rise 25-50% in during the next 1-2 years just to get to where I feel the stock should be. Management is confident of its a financial target of $13 in profits by 2020, and a 20 P/E on $13 in profits would equate to a $260 stock and more than a double in around three years. |
One Year Chart |
 Last qtr Celgene reported sales growth of 16% and profit growth of 36% which beat the 34% estimate. Profit growth was abnormally high this qtr due to a poor qtr in the year-ago period (this stock is more like a 22% grower). 2017 profit estimates ticked up from $7.03 to $7.22, and 2018’s from $8.64 to $8.77 which is a positive sign. Qtrly estimates also rose for the 3rd consecutive qtr and now analysts expect profit growth of 23%, 22%, 18% and 22% the next 4 qtrs. I’m telling you, this company has been growing great for a while now but the stock was held back by stupid politics. It’s time for Celgene to go on a run. With an Est. LTG of 23% per year and a P/E of just 16 it has the ability to. |
Fair Value |
 My Fair Value is a pessimistic 20x earnings, which would mean a $144 stock in 2017 and $175 in 2018. But if we get the breakout I feel CELG deserves, I will raise my Fair Value next qtr to a P/E between 22 and 25. Still, either way I’ll likely be holding this stock for the long-term with the 2020 $13 profit estimate in sight. |
Bottom Line |
 Celgene is one of the best companies the stock market has to offer even though the stock hasn’t been keeping pace with the profit growth. But to me that means huge upside in both the short-term and long-term as CELG has a lot of catching up to do. I’m moving this stock up in my Power Rankings as Trumps recent words and the stock/sector’s price action suggest a break out is imminent. CELG ranks 5th in the Growth Portfolio and Aggressive Growth Portfolio Power Rankings and 2nd the Conservative Stock Portfolio Power Rankings. |
Power Rankings |
Growth Stock Portfolio
5 of 32Aggressive Growth Portfolio 5 of 16Conservative Stock Portfolio 2 of 30 |
