Celgene (NASDAQ: CELG) develops and markets drugs to treat cancer, immunological disorders and other diseases. The company's research concentrates on small molecule compounds that inhibit tumor necrosis factor alpha (TNFa) production or aberrant estrogen production, or that may regulate kinases and ligases (enzymes).
Analysts really like the revenue growth rate for Revlimid, which received U.S. FDA approval in 2005, and treats a malignant blood disease called MDS. In 2006, Revlimid also received FDA approval to treat myeloma. Total Revlimid revenue should exceed $1.7-$1.8 billion in 2008. Further, mainstay Thalomid, which treats bone marrow cancer, rounds-out an impressive one-two signature drug duo. Also, the near-term re-acquisition of European rights for Thalomid will expand Celgene's geographic footprint.
Analysts also see revenue stream diversification with Vidaza, which treats Myelodysplastic Syndrome, in 2009, assuming successful completion of the Pharmon deal. The Reuters F2008/F2009 EPS consensus estimates for CELG are $1.50/$2.23.
The risks: Slower-than-expected sales increases for Revlimid would obviously hurt Celgene's results. Analysts are also keeping an eye on CELG's core commodity and skilled labor costs.
The First Call mean rating for CELG is: Buy [24 firms]. Mean 2008 target: $74.00 [high: $86, low: $61].
Stock Analysis: Celgene is a moderate-risk stock not suitable for low-risk investors. Investors with an investment horizon longer than two years should be rewarded from CELG's shares. Sell / Stop Loss if you were to purchase shares in this company: $47.
Disclosure: Lazzaro has no positions in stocks. In addition to private real estate holdings, he owns corporate and municipal bonds, and cash certificates of deposit.
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