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Celgene (CELG) to Report Q4 Earnings: What to Expect?

Celgene CorporationCELG is scheduled to report fourth-quarter 2015 results on Jan 28, before the opening bell. The company has posted a positive earnings surprise in three of the trailing four quarters with an average beat of 2.08%. Let's see how things are shaping up for this announcement.

Strong Product Sales to Drive Q4 Results

As per the preliminary results announced earlier this month, the company expects adjusted earnings of $1.18 per share in the fourth quarter. Net product sales for the quarter are expected to be approximately $2.54 billion.

Net product sales for the full year are expected to be approximately $9.2 billion, up 21% year over year. Revlimid sales are projected to be $5.8 billion, reflecting a 16% increase. Sales of Abraxane in 2015 are projected to grow 14% to $967 million. Pomalyst/Imnovid and Otezla are expected to contribute $983 million and $472 million, respectively, to Celgene's total revenue in 2015.

We note that Celgene is facing generic competition for several important products including Vidaza. We believe that focus will remain on the performance of key products like Revlimid and Otezla.

Along with preliminary results,Celgene provided its guidance for 2016. The company anticipates adjusted earnings for 2016 in the range of $5.50-$5.70 per share, up 19% from $4.71 expected for 2015.

Net product sales for 2016 are expected to be $10.5-$11 billon, up 17% year over year. Foreign exchange translations are projected to impact revenues negatively by $120 million. Net sales of oncology drug, Revlimid - the key growth driver at Celgene, are projected to be $6.6-$6.7 billion, reflecting a 15%year-over-year increase.We expect to see more details on the company's 2016 guidance on this quarter's earnings call.

What Our Model Indicates

Our proven model does not conclusively show that Celgene is likely to beat on earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) to likely post an earnings beat. That is not the case here as you will see below.

Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is pegged at 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at $1.09.

Zacks Rank: Although the company's Zacks Rank #1 enhances the predictive power of ESP, its 0.00% ESP makes surprise prediction difficult.

Conversely, we caution against stocks with a Zacks Rank #4 and #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks That Warrant a Look

Here are a few health care stocks that you may want to consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter:

Gilead Sciences Inc. GILD has an Earnings ESP of +5.86% and sports a Zacks Rank #1. The company is scheduled to release results on Feb 2.

Biogen BIIB has an Earnings ESP of +2.21% and holds a Zacks Rank #2. The company is slated to release results on Jan 27.

Cytokinetics, Incorporated CYTK has an Earnings ESP of +6.45% and carries a Zacks Rank #3. The company is expected to release results on Feb 11.

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GILEAD SCIENCES (GILD): Free Stock Analysis Report

CELGENE CORP (CELG): Free Stock Analysis Report

BIOGEN INC (BIIB): Free Stock Analysis Report

CYTOKINETCS INC (CYTK): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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