Celgene is poised to break-out to the upside

Meanwhile, margins should improve, as Celgene increases operational efficiency and drops low-margin drugs. The First Call FY2009/FY2010 EPS estimates for CELG are $2.05 to $2.66.

The risks include a global economic recovery that does not accelerate as expected, starting in Q1 2010, and/or clinical trial failures for a major pipeline drug.

Even so, institutional investors have determined that CELG's risk/return is tipped decidedly toward a Buy, having bid-up CELG's shares in the past six months. The stock gapped-up above the psychologically-significant $50 level earlier this year, incurred a constructive correction, is now comfortably above $50, and is poised to break-out. To be sure, CELG is not as cheap as it was in June, but this may be the last chance to establish a position and earn an outsized gain with the stock during this economic cycle.

The Sell/Stop Loss has been raised to $34, or to just under the entry point, from $22.

Stock Analysis: Celgene Corp. is a moderate-risk stock. If you've already purchased the company's shares, hold them. If not, consider buying a 25% position in CELG now; then buy another 25% in one month, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, don't buy more than 50% of your CELG position before December 2009. Revised Sell/Stop Loss if you bought shares in this company: $34.

Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.