Celgene Biopharma (NASDAQ: CELG) shares are trading higher today after an analyst on CNBC's Fast Money recommended the stock last night, adding that the company could be getting some good news related to the development of its Lymphoma treatment soon. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on CELG.
After hitting a one-year high of $75.44 in October, the stock hit a one-year low of $41.26 in December. CELG opened this morning at $65.90. So far today the stock has hit a low of $65.16 and a high of $66.93. As of 12:50, CELG is trading at $66.73, up $2.86 (4.4%). The chart for CELG looks bearish and improving slightly, while S&P gives the stock a bullish 4 Stars (out of 5) Buy rating.
For a bullish hedged play on this stock, I would consider an August bull-put credit spread below the $55 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 5.3% return in just seven weeks as long as CELG is above $55 at August expiration. Celgene would have to fall by more than 17% before we would start to lose money. Learn more about this type of trade here.
Short selling often tells much about what is going on in a sector, particularly when there is a common trend across the major players in that sector.
The end of May short selling can now be accessed from NASDAQ. Interestingly enough, short sellers at the end of May lightened up almost across the board on major NASDAQ biotech stocks from May 15 to May 30:
From the major names, a change in the overall trend can be spotted.
You can see the full short selling report for biotechs at BioHealthinvestor.com to see which other biotechs had an increase in short selling and to also see what the more active biotechs with lower market caps saw in their short selling activity.
Almost everyone these days has encountered cancer in one way or another. While the rate of cancer incidence has stabilized to declined since the early 1990s and, with newer and better treatments as well as early detection, cancer death rates have also declined, the war on cancer is still far from won.
It is no surprise, then, that a few days ago, IMS Health (NYSE: RX) -- a provider of market intelligence to the pharmaceutical and healthcare industries -- said that cancer drugs sales will nearly double by the year 2012. Assuming a compound growth rate of 12-15% a year, sales will grow from $48 billion in 2008 to $80 billion by 2012.
The main contributors to growth, according to the study, are an increasing number of patients on chemotherapy, not just in major markets but in emerging markets, too, as well as longer treatment periods for growing numbers of patients. Also fueling growth are the increased use of targeted therapeutic agents, along with first-time innovations coming to the market. Expensive new biotechnology drugs, and the increasing use of combination therapies that contribute to the exploding cost of treatment will also fuel cancer drugs sales growth.
The overall pharmaceutical market grew at a 6.4% pace in 2007, meaning that with its double-digit growth rate, the cancer drug market -- today contributing 17% to global pharmaceutical sales -- will only represent a greater proportion and emphasis. Of course, there will be factors moderating growth, such as drugs losing exclusivity and financial constraints of payers.
Cancer-fighting drugs can reach the market twice as fast as the average medicine, and companies can charge as much as $50,000 for a single course of treatment. It is no surprise then that with more and more drugs coming off patent many pharma companies are turning their attention to cancer. But can it save them?
Two leading advisors with noted expertise in the biotech sector have both been long-term fans of Celgene (NASDAQ: CELG), both holding the stock in their respective model portfolios.
Nate Pile explains, "Now that the Pharmion merger is behind us, it appears that investors are once again recognizing Celgene for what it is – namely, one of the premier stories in the biopharmaceutical space.
"As I have said a number of times before, if I could only own one biotech stock for the next ten years, Celgene would be it... and I encourage you to make it a 'first choice' for your portfolio as well!
"The stock is likely to exhibit its usual volatility around the company's upcoming earnings report, but I encourage you to take advantage of any sell-off that may occur to aggressively add to your position in this market leader. CELG is now considered a strong buy under $60 and a buy under $68."
John McCamant states, "Celgene had some good news of late on the thalidomide front. The company has received approval of the application to expand the drug's label to treat newly diagnosed multiple myeloma (MM) patients in Australia.
Readers of this space know that, for a plethora of reasons, companies in the pharmaceutical and biotech sectors are not my preferred stocks, but there are exceptions. And with the above in mind, Celgene is worth a review.
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.
While bank stocks aren't exactly hot, they triggered yesterday's rally because when J.P. Morgan Chase & Co (NYSE: JPM) and Wells Fargo & Company (NYSE: WFC) reported, there were no unexpected surprises, according to the Wall Street Journal's "Heard on the Street". The ups and downs in the sector are expected to continue.
According to people familiar with the matter, the Wall Street Journal reported that Yahoo! Inc (NASDAQ: YHOO) may be moving closer to outsourcing its search advertising to Google Inc (NASDAQ: GOOG) after an initial test yielded what they considered to be positive results.
OTHER PAPERS:
The New York Times reported that AT&T Inc (NYSE: T) is planning today to make an announcement that they will gift $100M to improve the skills of the nation's work force and fight the problem of high school dropouts.
WEB SITES:
Celgene Corporation (NASDAQ: CELG) is best known for its blockbuster drug Revlimid which is used treat multiple myeloma, a cancer which attacks blood and bones. For patients, it can prolong their lives about 2.9 years, or longer, according to Investor's Business Daily's "The New America".
In the current choppy/consolidating (or perhaps worse) market, pharmaceutical companies and selected biotechs garner attention as defensive plays, and among these Celgene is worth an evaluation.
Celgene Corporation (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. Mainstay Thalomid, which treats bone marrow cancer, rounds-out an impressive one-two signature drug duo.
For 25 years, Steven Halpern, editor of TheStockAdvisors.com, has surveyed the leading financial newsletter advisors asking for their favorite stocks for the coming year. This article is one of 100+ ideas in the Best Stocks for 2008 report.
"The company is focused on the development of new and improved treatments for various cancers and other severe, immune, inflammatory conditions, and is well on its way to becoming a major global biopharmaceutical entity.
"Over the years, we have watched management consistently deliver on its promises to shareholders and create additional value. The most notable cancer drugs at CELG are Thalidomide and Revlimid (a second-generation version of Thalidomide).
"These are oral therapies that have become the cornerstone in the treatment of multiple myeloma (MM), and which are in clinical development for many other blood-borne cancers, including non-Hodgkin's lymphoma (NHL) and CLL.
With Christmas shopping taking center stage, let's not forget that the Jewish Holiday of Hanukkah starts in a week. For those of you looking for a gift to get a loved one, give them the tip to buy these two stocks.
Washington Mutual (NYSE: WM), I had my first passbook account with the bank about 30 years ago. Back then it was known as "a friend of the family." Since then they have become one of the largest banks in all of the US, and are at the center of the whole subprime mess. That being said, the stock has gotten absolutely crushed and at about $17/share, and a dividend yield over 12% this looks intriguing. Yes, I know that Washington Mutual might cut the dividend, but even if the company slices it in half it's still more than 6%. I say go for it!
Celgene (NASDAQ: CELG) the biotech star has lost some luster falling over 20% in the last 5 weeks. Its cancer drug Revlimid is a true blockbuster and I expect continued strong earnings for the company. Historically, each time Celgene has dropped 20% it has become a really good entry point and this time should be no different.
Happy Hanukkah.
Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. Disclosure: Writer holds a position in CELG. He has no position in any other stock mentioned as of 11/21707.
MOST NOTEWORTHY: Global biotech stocks and Genlyte were today's noteworthy downgrades:
Bernstein said biotech stocks are still not cheap compared to traditional pharma and that catalysts are limited near-term. The firm downgraded stocks including Amgen (NASDAQ:AMGN) and Celgene (NASDAQ:CELG) to Neutral.
Genlyte (NYSE:GYLT) was downgraded to Neutral from Outperform at Baird following its acquisition by Philips (NYSE:PHG).
OTHER DOWNGRADES:
Keefe Bruyette downgraded First American (NYSE:FAF) to Market Perform from Outperform.
Portugal Telecom (NYSE:PT) was downgraded to Neutral from Buy at Merrill Lynch.
Goldman downgraded the automobiles sector to Cautious from Neutral.
TheStreet.com's Jim Cramer says the poor outlook for this economy has stemmed the flood of takeovers from abroad we'd normally see in this kind of market.
Where are the Europeans? Where are the Asians? Where are the Middle Easterners? Are they all cowed into not buying our companies despite the decline in the dollar?
Consider that there have been only two deals above $10 billion this year: AstraZeneca (NYSE: AZN) (Cramer's Take), which bought Medimmune for $15 billion, and Saudi Basic Industries, which purchased GE Plastics for $12 billion. No one has taken advantage of the astounding decline in the U.S. dollar to buy up enterprises.
Take two that seem absurdly low: Whirlpool (NYSE: WHR) (Cramer's Take) and Black & Decker (NYSE: BDK) (Cramer's Take). Both companies have bought in an immense amount of stock. Both companies now trade at $5 billion in value. Give them a 25% haircut and you can see how much these name-brand companies are marked down.
Celgene (NASDAQ: CELG), a quickly-growing biotech firm focused on technologies to treat cancer and immune-inflammatory-related diseases, announced today that the company is acquiring Pharmion Corp. (NASDAQ: PHRM) for a tad under $3 billion. Celgene markets proprietary thalidomide-based drugs for blood cancers. The acquisition of Pharmion gives Celgene a leukemia treatment that helped patients live longer in a study.
Pharmion holders will get $72 a share, 46% higher than Pharmion's most recent closing stock price of $49.28 on November 16.
This deal is being warmly received on Wall Street. While expensive, "there are few deals that make as much business sense and add as many operating synergies in the biotechnology space," according to a report from Bank of America. "With the acquisition, Celgene is increasing the depth of its pipeline which we believe was required for the next leg of growth. Celgene is acquiring a pipeline including Vidaza, a potential best in class therapy for Myelodysplastic syndromes (MDS)."
Celgene is a quickly-growing biotechnology firm that is now shoring up its pipeline with a new therapy with lots of potential. Mr. Mad Money himself has publicly supported Celgene. You can see what BloggingStocks had to say about Cramer's interview with Celgene COO back earlier this year.
If you're a bear, then at least another down beginning may await you in today's session. At least, that's the indication U.S. stock futures are giving this morning. As economists forecast the risk of a recession increased due to the collapse of the housing market along with the credit crunch and as oil prices jumped again on OPEC comments, it seems the bears have returned.
On Friday, U.S. stocks saw volatile session that ended with gains, with the Dow industrials rising 66 points, or 0.51%, the Nasdaq Composite up 18 points, or 0.72%, and the S&P 500 rising 7 points, or 0.52%. On the week stocks finished higher in a week full of wild swings. The Dow ended up 1.03%, the S&P 500 and the Nasdaq ended up 0.35%.
Not much economic data is due today so investors are focusing on rising oil prices, overseas activity and some M&A action.
Cognizant has been on Fortune's list of fastest growing companies for the past five years. This Teaneck-based member of the S&P 500 is a global IT services firm with clients in the health care, financial services, and manufacturing industries. Cognizant's three-year annual revenue growth rate was 56 percent; its three-year annual earnings per share growth rate was 55 percent. The consensus of analysts surveyed by Thomson Financial is that Cognizant is a buy, and the company has beat Wall Street expectations for the past four quarters. The share price of $85.79 at close on Friday is up from the 52-week low of $67.60 in September. The price has risen since Cognizant announced a stock split and share repurchase program in September, and the Motley Fool has since dubbed Cognizant a hypergrowth stock.
Summit-based Celgene is a biopharmaceuticals firm involved in cancer treatment and stem cell research. Its three-year annual revenue growth rate was 48 percent; its three-year annual earnings per share growth rate was 33 percent. The consensus of analysts surveyed by Thomson Financial is that Celgene is a buy. The share price reached a 52-week high of $72.91 on Friday. The Motley Fool recognized Celgene for its sustainable competitive advantage over its rivals, and Jim Cramer also likes Celgene.
Celgene Biopharma (NASDAQ: CELG) shares are trading higher today after an analyst on CNBC's Fast Money recommended the stock last night, adding that the company could be getting some good news related to the development of its Lymphoma treatment soon. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on CELG.
Almost everyone these days has encountered cancer in one way or another. While the 
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With Christmas shopping taking center stage, let's not forget that the Jewish Holiday of Hanukkah starts in a week. For those of you looking for a gift to get a loved one, give them the tip to buy these two stocks. .gif){kind=logo}
TheStreet.com's Jim Cramer says the poor outlook for this economy has stemmed the flood of takeovers from abroad we'd normally see in this kind of market. 
If you're a bear, then at least another down beginning may await you in today's session. At least, that's the indication U.S. stock futures are giving this morning. As economists forecast the 
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