Celgene (CELG) stock jumped over 30% in the past few trading days — and with good reason. Investors are excited over what is the biggest biotech merger in about 10 years. The deal involves Bristol-Myers (BMY) and is worth around $74 billion. The companies will join forces to address the needs of patients with cancer, inflammatory and immunologic diseases and cardiovascular diseases. Combined, the companies will have nine products with $1 billion in annual sales and the potential for major growth and developments in the cancer and cardiovascular fields.
Cantor Fitzgerald’s Alethia Young says she’s surprised about the news, but pleasantly so. The analyst reiterates an Overweight rating for the stock with a price target of $100. (To watch Young’s track record, click here)
“We view this deal as a significant shift from current Biopharma strategy but we can appreciate the rational with large cap biotechs having been more single product/asset stories that are starting to mature in growth. They make attractive targets for companies looking for financial engineering deals over time as well,” the analyst explains.
Young suggests that the “overhand on IP with Revlimid may be one culprit for the discount.” Nevertheless, the analyst is looking forward to learning more about the impact and rationale behind this big move. “We think that this gives Bristol more near term revenues with Revlimid and Pomalyst (close to $12.6B) in current sales. We also note that Celgene has many near term pipeline assets coming to market in 2020 including Luspatercept (partnered with XLRN, Not covered), CAR-T therapies (Juno deal and BLUE assets), and neurology with Ozanimod.”
TipRanks showcases CELG as one that has drawn optimism mixed with caution when it comes to consensus opinion among sell-side analysts. Out of 14 analysts polled in the last 3 months, 8 are bullish on the stock, while 6 remain sidelined. With a slight return potential of 37%, the stock’s consensus target price stands at $110.90. (See CELG’s price targets and analyst ratings on TipRanks)