Analysts weigh in on biotech companies Celgene Corporation (NASDAQ:CELG) and Relypsa Inc (NASDAQ:RLYP). While one analyst is bullish on Celgene ahead of earnings, another remains cautious on Relypsa as a competing drug may enter the market.

Celgene Corporation

Celgene will post first quarter earnings on Thursday, April 28 before market open. Ying Huang of Bank of America/Merrill Lynch expects the company to post adjusted EPS of $1.28, marking a 19% y/y decrease, and $2.6 billion in revenue, which is in-line with the overall consensus.

Huang points to the company’s three main drugs to drive revenue. He expects Revlimid, an orally-administered therapy for multiple myeloma, to drive $1.574 billion in revenue, a 17% y/y increase. He expects Pomalyst to earn $294 million, Abraxane to earn $264 million, and Otezla to earn $198 million. These figures mark y/y increases of 48%, 18%, and 229%, respectively.

The analyst expects the earnings call to focus on guidance, the impact of FX headwinds, and product sales, noting, “Performance of Abraxane and Otezla in 2017 may be just shy of the $1.5B-$2B range in the original guidance.” While investors expect the company to “revise 2017 guidance down from product sales of $13B-$14B and EPS of $7.25,” the overall analyst consensus remains at product sales of $13.1 billion and EPS of $7.21. Huang comments, “In any case, we believe the stock reaction would be muted given the recent management comments and expectations from investors.” Aside from guidance, investors will be listening to hear about “steps the company is taking to meet their long term 2020 guidance of >$21B in sales and >$13.00 EPS” and updates on the continuing launch of Otezla.

In light of the company’s upcoming earnings report, Huang maintains a Buy rating on Celgene with a $125 price target, marking a 13% upside.

Ying Huang has a 70% success rate recommending stocks with a 16.3% average one-year return per rating.

According to TipRanks, 90% of analysts covering the stock are bullish while 10% remain neutral. The average 12-month price target is $141.75, marking a 28% potential upside.


Relypsa Inc

While Relyspa’s application to approve Veltassa in Europe is underway, Irina Rivkind Koffler of Mizuho remains cautious on the company, noting that a competitor to Veltassa may hit the market soon. Most importantly, the analyst is keeping her eyes open for a potential takeout.

Veltassa, Relypsa’s FDA-approved drug to treat hyperkalemia, is en route to receiving approval in Europe. Koffler expects the drug to earn approval in late 2017 with commercial launches throughout 2018. However, shares remain volatile due to “continued media speculation about a potential takeout,” which is the analyst’s main concern.

Koffler also highlighted that AstraZeneca’s competing drug for hyperkalemia, ZS-9, is under FDA review and will be approved or rejected by May 26. There is a possibility that the review date will be pushed back a few months, and Koffler would “view such a delay as a positive development for Relypsa, since it would allow the company more time to capture physician mindshare and assess its strategic alternatives.” Koffler notes, “Relypsa remains under pressure to either sell itself or raise money” before the FDA rules on ZS-9.

Koffler reiterates a Neutral rating on Relypsa with a $22 price target, marking a 17% upside from current levels.

Koffler has a 54% success rate recommending stocks with a 27.3% average one-year return per rating.

According to TipRanks, 82% of analysts covering the stock are bullish, 9% are neutral, and 9% are bearish. The average 12-month price target is $36.20, marking a 94% potential upside.