At a recent dinner with brokerage firm Cowen, CFO Peter Kellogg and Inflammation & Immunology (I&I) President Scott Smith of Celgene Corporation (NASDAQ:CELG) just provided a deeper look into the biotech giant’s I&I franchise to highlight a bolstered financial state following last week’s robust second-quarter earnings results.
Praising Celgene’s flourishing operational outlook and significant growing potential for its I&I franchise, Cowen analyst Eric Schmidt deems Celgene “a top pick.” In reaction, Schmidt reiterates a Buy rating with a price target of $150, marking a nearly 30% increase from where the stock is currently trading.
Currently, Celgene’s key catalyst is Otezla, an oral treatment for psoriatic arthritis and plaque psoriasis, which Schmidt finds “right on track” within the company’s projections to score $1 billion in its second sales year on the U.S. market, well on its way to reaching blockbuster status this year. For Schmidt, the golden opportunity likes beyond western shores, as Otezla has already been launched in Germany, with additional international launches in the works into early next year. With an international market offering significantly higher patient numbers coupled with pricing likely to be 60% lower outside the U.S., the ex-U.S. market could be critical to Otezla’s commercial success.
Meanwhile, Otezla has outclassed the Street’s expectations as well as Schmidt’s. Schmidt advises investors to anticipate prioritization of building the pipeline as well as “an ‘aggressive’ approach to business development.” Schmidt explains, “Celgene believes it has plenty of balance sheet flexibility to contemplate mid sized acquisitions should the opportunity arise, and has the ability to use off-shore cash to fund portions of its transactions. Secondarily, Celgene will return cash to shareholders via stock repurchases. The company took advantage of a weak stock price in H2 to buy more shares than expected, but is not repurchasing stock now. It is also not contemplating a dividend now, but may do so in the future.”
With Otezla as a blockbuster-builder, and impending top-line data from 12-week Phase II of Crohn’s active disease-treating pipeline drug GED-0301, which Schmidt came away from the management dinner deeming to be “very little risk,” the analyst ultimately expects results “in the ballpark of what might be viewed by management as “favorable,” urging investors to be at ease owning CELG shares.
According to TipRanks, Eric Schmidt is a top five-star rated analyst, ranked #44 out of 4,101 analysts. Schmidt has earned a high ranking by upholding a 57% success rate and earning 24.2% in his annual returns. When recommending CELG, Schmidt realizes 5.6% in profits.
TipRanks analytics demonstrate CELG is a Strong Buy. Based on 18 analysts polled in the last 3 months, 16 rate a Buy while 2 maintain a Hold. The 12-month average price target stands at $144.38, marking an almost 25% upside from where the shares last closed.
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