Analyst Mara Goldstein of Cantor Fitzgerald recently weighed in on Celgene Corporation (NASDAQ:CELG) after the company settled its patent litigation of REVLIMID with Natco Pharma earlier this week. The company entered a licensing agreement with Natco Pharma allowing it to use Celgene patents to manufacture the generic version of its drug REVLIMID in the U.S. starting in 2022.
The analyst believes that this settlement “effectively manages the entry of generic lenalidomide (REVLIMID) in the U.S. and removes the risk of a negative outcome in the Natco patent challenge,” eliminating adverse effects to Celgene’s valuation. In more broad terms, this risk reduction results in a more favorable outcome to the entire risk profile of the company. According to the analyst, the deal will also have a positive effect on shares, and encourages investors to own Celgene stock in 2016.
The analyst also expressed bullish sentiment regarding the company’s current and pipeline drugs. She states that currently sold drugs OTEZLA and POMALYST “offer high growth rates” and that pipeline drugs GED-301 and ozinamoid have the potential to do the same, representing a “$5+ billion opportunity.” Goldstein is also upbeat on REVLIMID’s “current fundamentals”, citing continued growth even as it plays a smaller role in revenues to due newer products. Related, the analyst states that “the company continues to throw off cash, even with the increased debt associated with recent transactions, to fund R&D, share repurchase, and high EPS growth.”
Goldstein believes that the company’s “cash flow and capital management are likely to deliver upside” if the company posts conservative guidance, expected in January. She reiterated her Buy rating on the company with a $163 price target due to “Revlimid’s footprint through both internal development, licensing, and acquisition.”
Analyst Mara Goldstein has rated Celgene 16 times since 2009. She has an 81% success rate recommending the company with an average return of 20.5% on the stock when measured over a one-year time horizon and no benchmark.