Top25-SA-Banner

RBC Capital Makes a Bullish Case for Celgene (CELG) Amid Overblown Share Weakness

RBC Capital's Brian Abrahams believes that the exit of Celgene's former BD chief is causing an unwarranted dip in the stock; here's why.


Celgene (NASDAQ:CELG) investors got hit with some more executive overhaul with chief of Business Development (BD) George Golumbeski walking out of the biotech giant’s doors. The news did not go over well, with shares taking a close to 5% stumble yesterday. In fact, Golumbeski’s retirement transpired last month, and it is just the reveal that has come as a shock to the Street.

RBC Capital analyst Brian Abrahams sees share “weakness” here as entirely “unfounded,” defending Celgene while reiterating an Outperform rating on the stock without listing a price target. (To watch Abrahams’ track record, click here)

Keep in mind, Abrahams notes, Rob Hershberg has been in charge of CELG’s BD department for the last year- since April of last year, with Golumbeski evolving to a role that was more “strategic” as he approached his final career arc with the company. It was Hershberg who was the man behind the latest key deals with JUNO and Impact Biomedicines, underscores the analyst. “Given that this has a been a transition in the works for sometime, we do not see any relation between reports about this emerging today and proximity to upcoming readouts, such as at ASCO or otherwise, like XLRN, BLUE, and JUNO,” argues Abrahams.

Bottom line, the analyst explains that while sentiment could be better circling Celgene, he maintains a bullish stance here: “We do find it somewhat ironic that shares are selling off on news that the head of BD responsible for orchestrating many of the deals over the last years that have been criticized for running into stumbling blocks or for not sufficiently building for post-Revlimid revenue sustainability is leaving. However, we do believe it illustrates the sharply negative sentiment pervasive in the name, which we continue to believe will require a turnaround in catalysts to improve upon. Still, at current levels, with potential for improved CAR-T narrative at ASCO, ph.III luspatercept data, and ultimate Revlimid IP settlement, we see some potential for upside drivers, though we believe execution will be key.”

TipRanks suggests the bulls win out when it comes to sell-side analysts’ sentiment on Celgene’s market opportunity at play. Out of 21 analysts polled in the last 3 months, 13 are bullish on CELG stock while 8 remain sidelined. With a return potential of nearly 57%, the stock’s consensus target price stands at $117.07.