) announced that its board has cleared a program to buy back up to
an additional $2.5 billion of its common stock, thus returning cash
to shareholders. The move will boost Celgene's bottom line.
The repurchase program, effective immediately, is open-ended. We
believe that the expansion of the buyback program highlights the
biopharmaceutical company's commitment to create value for
shareholders. We remind investors that in August 2011, the board of
directors at Celgene had cleared a program to buy back up to an
additional $2 billion of its common stock.
We note that during 2011, Celgene bought back approximately 38.3
million shares for $2.22 billion and approximately 2.35 million
shares for $169 million in the first quarter of 2012. Celgene
exited the first quarter of 2012 with approximately 449 million
shares outstanding. A share repurchase at the company would lead to
a lower number of outstanding shares, escalating its earnings per
share ratio, even if profits remain the same.
We note that Celgene has been constantly making
acquisitions/signing deals to boost its product portfolio as well
as pipeline. In April 2012, Celgene inked a collaboration and
licensing deal with Epizyme, Inc., for the discovery, development
and commercialization of personalized medicines for treating
patients suffering from genetically defined cancers. Moreover, in
March 2012, Celgene acquired Avila Therapeutics to boost its
oncology pipeline. We note that Celgene had made two important
acquisitions (Abraxis BioScience and Gloucester Pharmaceuticals) in
2010 to bolster its oncology portfolio. We believe that Celgene's
financial flexibility and strong balance sheet should allow it to
continue making such prudent acquisitions.
Celgene, which focuses on the discovery, development and
commercialization of novel drugs for treating cancer and
inflammatory diseases, carries a Zacks #3 Rank (Hold rating) in the
short run. Currently, we have a Neutral stance on the stock in the
CELGENE CORP (CELG): Free Stock Analysis Report
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