We are maintaining our Neutral recommendation on
) with a target price of $76.00. The stock carries a Zacks #3 Rank
(Hold rating) in the short run.
Celgene disclosed its second quarter 2012 results in July 2012. The
company earned $1.10 per share on an adjusted basis during the
quarter. Earnings were above the Zacks Consensus Estimate of $1.06.
Higher-than-expected expected revenues were primarily responsible
for the earnings beat in the quarter.
Total revenue climbed 15.5% to $1.37 billion in the second quarter
of 2012. Revenues were boosted by the impressive performance of
Celgene's cancer drugs Revlimid, Abraxane and Vidaza.
Net sales of Revlimid, the key growth driver at Celgene, came in at
$934 million, reflecting an increase of 17% over the year-ago
period. Net sales of Vidaza climbed 24% to $201 million, driven by
strong sales in international markets. Net sales of Abraxane
climbed 16% to $110 million due to strong US sales.
Apart from the strong oncology portfolio, Celgene boasts of a
robust pipeline with multiple pipeline-related events lined up in
the coming quarters. The decision on oncology candidate
pomalidomide (target date: February 10, 2013) is an eagerly awaited
event. The company is also seeking EU approval for the candidate.
Meanwhile, a decision from the US Food and Drug Administration
(FDA) is expected in October 2012 on Celgene's efforts to expand
Abraxane's label into the advanced non-small cell lung cancer
indication. Positive news from the FDA would boost Celgene's
already strong oncology portfolio.
Moreover, Celgene is highly optimistic on the potential of
apremilast, which is being developed for multiple indications such
as moderate-to-severe psoriasis and psoriatic arthritis among
others. Celgene is also advancing the development of the
early-stage candidates in its pipeline.
We believe that the successful development and commercialization
of the pipeline would boost Celgene's top line further. We are also
impressed by Celgene's financial flexibility and strong balance
CELGENE CORP (CELG): Free Stock Analysis Report
To read this article on Zacks.com click here.
However, in June 2012, Celgene suffered a setback in its efforts to
expand the label of Revlimid. The company withdrew its marketing
application in the EU where it was seeking approval for Revlimid as
a front-line maintenance therapy for treating multiple myeloma
patients. Celgene also pushed back its plans to seek approval of
Revlimid for the additional indication in the US. Any further
discouraging news on Revlimid will pull down the stock further
since Revlimid is Celgene's key growth driver.
We are also concerned about the decline in the sales of cancer
drug, Thalomid. The continuing decline in Thalomid sales has the
potential to hurt Celgene's top line if other products do not
perform impressively enough.