Stock (Symbol) |
Celgene (CELG) |
Stock Price |
$111 |
Sector |
| Healthcare |
Data is as of |
| August 25, 2016 |
Expected to Report |
| Nov 3 – Nov 7 |
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 |
 Celgene (CELG) has been producing impressive growth of around 20%, yet the stock is lower than it was a year-ago as drug stocks are under pressure in fears of a Clinton Presidential victory. Hillary Clinton has vowed to crack down on price increases for drugs, but I feel CELG will continue to grow in the 20% range regardless as it is expected to have multiple Phase III trials over the next two years. 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. 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 $11 billion a year to $15 billion. Additionally, Ozanimod might also be effective against ulcerative colitis, Crohn’s disease, lupus or psoriasis. Celgene is on sale right now as the Biotech sector is under pressure but I think that makes this stock a solid bargain. CELG is a safe stock with an Expected Long-Term Growth Rate of 22% a year selling for just 19x earnings. Although the stock doesn’t pay a dividend, management uses cash to make acquisitions and buy back stock. There’s excellent long-term appeal here for both conservative investors and growth investors who buy and hold. |
One Year Chart |
 Last qtr Celgene delivered 17% profit growth on a 21% gain in sales. Profits were expected to rise 12% and the company beat the street. Annual profit estimates stayed around where they were last qtr, with 21% profit growth expected for 2016 and 23% for 2017. Looking ahead, profits are expected to grow 20%, 31%, 20% and 17% the next four qtrs. For the 2nd straight qtr this stock has had a P/E of 19 and an Est LTG of 22%. This stock is undervalued. |
Fair Value |
 Around a decade ago, Celgene was a young up-and-comer as profit growth just started happening. Thus the stock had a high P/E due to the rapid rate of profit growth. Then around 2011-2012 CELG was basically ignored, and the stock became undervalued as it sold for 14-15 times earnings. In recent years the stock caught up to where it should have been as the P/E went to 25. Now, at just 19x earnings, I feel this is a great buying opportunity. |
Bottom Line |
 With multiple Phase III trails set to occur during the next 2 years, Celgene has a robust pipeline for growth. I’m very impressed that profits are expected to climb more than 20% in both the immediate future and long-term. Drug stocks are under pressure overall, but this company has the ability to power through regardless of who is elected POTUS. CELG ranks 11th in the Growth Portfolio and Aggressive Growth Portfolio Power Rankings and 1st the Conservative Stock Portfolio Power Rankings. |
Power Rankings |
Growth Stock Portfolio
11 of 37Aggressive Growth Portfolio 11 of 16Conservative Stock Portfolio 1 of 37 |
