| Stock (Symbol) | Stock Price | |
Celgene (CELG) |
$141 |
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| Data is as of | Expected to Report | Sector |
August 27, 2013 |
Oct 24 |
Healthcare |
| Sharek’s Take | ||
 Celgene got a boost in annual profit estimates this quarter, and now the stock is on track to make an amazing $10 a share in profits in 2015. This is big news because a P/E of just 20 would get the stock from $141 to $200 — a gain of 42% in just two years. That’s 20% compounding. What’s pushing estimates higher is CELG’s strong product pipeline. Abraxane, used for lung and breast cancer, also could be approved by the FDA for pancreatic cancer. Also, Revlimid, the company’s biggest drug that treat multiple myeloma (a blood cancer), could become more widespread in treating the disease. It seems clear to me CELG is set to double its stock price within three years, but the stock is selling where it should be today. |
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| One-Year Chart | ||
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| Earnings Table | ||
 Even though I expected profit growth to slip into the teens by now, growth continues to stay in the mid-20 percent range. Profits increased 25% last quarter on a 17% increase in sales.CELG beat the street by a solid 9 cents, which was more than it beat during the prior four quarters combined.
Annual Profit Estimates got a nice jump. This is so good I have turned positive on the near-term outlook of the stock, after telling clients to sell half their position last quarter. 2015 estimates pushed past $9 per share, and $10 seems easily achievable. |
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| Fair Value | ||
 I used to think CELG was worth 20 times earnings. But now with the increase in estimates (in not only 2013, but 2014 and 2015 too) I feel 24 times earnings is justified. Too bad the stock’s selling for that now. CELG is fairly valued, and has good potential for investors holding through next year (and beyond). |
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| Ten-Year Chart | ||
 This stock is extended in the ten-year view. Very extended. I feel CELG could take a breather for the next six months, and build a new base. Part of the reason for the recent rise was the fact the stock didn’t go up as much as it should have during 2009, 2010 and 2011. It had some catching up to do. |
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| Power Ranking | Bottom Line | |
Growth Portfolio
9 of 24 |
Celgene is on pace to make $20 by 2015 and if the stock retains the same P/E that means a move from $140 to $240. But in the meantime the stock is selling where it should. Each quarter, I continue to move CELG down in my Power Rankings. In the Growth Portfolio Power Rankings it drops from 3rd to 7th and now 9th. I recently sold the stock from the Aggressive Growth Portfolio because it is fully valued. |
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Aggressive Growth Portfolio
N/A |
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Speaking of double, CELG has doubled during the past year. The bad news is CELG isn’t on sale anymore. When 