Celgene Corporation (NASDAQ:CELG)’s proposed $7.2 billion acquisition of Receptos Inc (NASDAQ:RCPT) would bring the pharmaceutical giant a potential blockbuster product candidate, Ozanimod, currently in Phase 3 development for the treatment of ulcerative colitis (UC) and relapsing MS (RMS). Piper Jaffray analyst Joshua Schimmer believes that the asset fits nicely into CELG’s emerging I&I franchise, which now features several blockbuster potential products including GED-301 and Otezla.
Schimmer wrote, “This deal is the largest and most aggressive in a series of recent moves by CELG as the company continues to diversify and identify attractive assets for M&A and plan for life post-Revlimid. RCPT’s lead drug ozanimod is currently in P3 trials for both relapsing multiple sclerosis and ulcerative colitis and CELG predicts peak sales of $4-6B/Yr.”
“CELG also increased 2020 guidance to $21 B (from $20 B) and adjusted EPS to $13+. Concomitantly, CELG also pre-announced preliminary Q2 net product revenue of $2.3 B (22% increase YoY) and adjusted EPS of $1.23 (37% increase YoY), demonstrating strong underlying earnings growth. While the deal is certainly aggressive, CELG is our top large cap pick based on a strong, NT and LT EPS growth at a reasonable valuation.”, the analyst added.
Schimmer reiterated an Overweight rating on Celgene stock with a price target of $144, which represents a potential upside of 17% from where the stock is currently trading.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Joshua Schimmer has a total average return of 12.6% and a 64.1% success rate. Schimmer has a 17.8% average return when recommending CELG, and is ranked #239 out of 3708 analysts.
Out of the 16 analysts polled by TipRanks, 13 rate Celgene Corporation stock a Buy, while 3 rate the stock a Hold. With a return potential of 9.5%, the stock’s consensus target price stands at $134.46.