Yesterday, Celgene Corporation (NASDAQ:CELG) shares were trading up 6% after posting a robust third-quarter EPS beat. Subsequently, Cantor analyst Mara Goldstein reiterates a Buy rating on shares of CELG with a $159 price target, which represents a nearly 52% increase from where the stock is currently trading.
The biotech giant’s adjusted diluted non-GAAP EPS of $1.58, a 28% year-over-year surge, with revenue of $2.983 billion solidly bested the analyst’s projections of $1.46 for EPS and $2.791 billion for revenue. The analyst notes that top line helped drive EPS growth upward and contributed in offsetting operating expenses. Another “positive impact” comes from $273 million in share repurchases, which was ideal for the bottom line. Moreover, CELG also raised guidance for this year as well as the next, with 2016 EPS guidance now at $5.88 to $5.92. In reaction, the analyst has raised her 2016 EPS forecast from $5.78 to $5.90.
Goldstein believes, “This is consistent with our thesis that our previously above-guidance EPS forecast would be validated with EPS beats. While the quarter did include a roughly $0.05 contribution from bulk REVLIMID purchase, the underlying strength of the franchise and the leverage it creates on the P&L is substantial. We think that Celgene has substantial flexibility to show higher EPS than guidance suggests.”
Moreover, the analyst contends, “REVLIMID has been a growth engine, and positive trends in duration and market share continue to support the franchise, prompting yet another bump in 2017 guidance, offsetting anemic ABRAXANE sales, in our view. REVLIMID’s growth is a double-edged sword in that it fuels opportunities for growth and investment, but could be harder to offset when its patent expires.”
Nonetheless, despite the patent expiration looming, Goldsztein believes between the company’s negotiated settlement “with a generic provider” bolstered by OTEZLA, POMALYST, and a stellar pipeline, the firm should have enough “counterweights” weighing in its favor. As REVLIMID continues its expansion, Golstein observes “continued opportunities for upside.”
Looking ahead, the analyst anticipates shares “could rally” closer to the American Society of Hematology (ASH) annual meeting in December and the close of 2016.
As usual, we recommend taking analyst notes with a grain of salt. According to TipRanks, analyst Mara Goldstein is ranked #3,813 out of 4,188 analysts. Goldstein has a 35% success rate and faces a loss of 4.2% in her annual returns. However, when recommending CELG, Goldstein gains 7.6% in average profits on the stock.
TipRanks analytics indicate CELG as a Strong Buy. Based on 15 analysts polled in the last 3 months, 13 rate a Buy on CELG, while 2 maintain a Hold. The 12-month price target stands at $140.42, marking a 34% upside from where the shares last closed.