) is set to report its third quarter 2013 results on Oct 24
before the market opens. Last quarter, the company posted a 7.69%
positive surprise- the fifth consecutive outperformance- driven
by impressive sales of Celgene's cancer drugs Revlimid, Abraxane
and Pomalyst. Let's see how things are shaping up for this
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Factors to consider this Quarter
Celgene boasts of an impressive oncology portfolio, driven by
Revlimid. Revlimid sales are expected to be strong in the third
quarter of 2013 as well. Pomalyst, approved earlier in the year
for treating multiple myeloma patients, performed very well in
the preceding quarter (the drug's first full quarter in the
market). Focus will be on whether Pomalyst sales continue to be
strong in the third quarter as well.
We are concerned about the declining sales of another oncology
drug, Thalomid, at Celgene. In the second quarter of 2013,
Thalomid sales declined 13% to $66 million. We believe this
decline will continue as safer and more effective drugs are
available for multiple myeloma. Moreover, sales of another
oncology drug Vidaza, should go down due to generic competition,
hurting Celgene top line. We note that
Dr. Reddy's Laboratories Ltd.
) gained U.S. approval to market its generic version of the drug
Our proven model does not conclusively show that Celgene is
likely to beat earnings this quarter. That is because a stock
needs to have both a positive Zacks
(Expected Surprise Prediction) and a Zacks Rank of #1, 2 or 3 for
this to happen. That is not the case here, as you will see below.
: The Zacks ESP is 0.0%. This is because the both the Most
Accurate estimate and the Zacks Consensus stand at $1.38 per
Zacks Rank #3 (Hold)
: Celgene carries a Zacks Rank #3. The Zacks #3 Rank when
combined with a 0.0% ESP makes surprise prediction difficult.
Stocks to Consider
While an earnings beat cannot be predicted with certainty for
Celgene, here are some firms you may want to consider on the
basis of our model, which shows that they have the right
combination of elements to post an earnings beat this quarter:
Endo Health Solutions Inc
), with Earnings ESP of +2.66% and a Zacks Rank #1 (Strong Buy).
), with Earnings ESP of +2.56% and a Zacks Rank #2 (Buy).