Piper Jaffray Bullish on Two Pharma Giants: Celgene Corporation (CELG) and Incyte Corporation (INCY)

Piper Jaffray analyst Joshua Schimmer weighs in on big pharma companies Celgene Corporation (NASDAQ:CELG) and Incyte Corporation (NASDAQ:INCY), maintaining a bullish outlook despite disappointing third-quarter revenues and mediocre study results.

Celgene Corporation

After Celgene reported its results for the third-quarter, analyst Joshua Schimmer from Piper Jaffray weighed in on the stock, reiterating his Overweight rating for the Celgene with a price target of $163.

In his report to investors, Schimmer notes that while Celgene’s revenues fell short of consensus, proforma EPS beat consensus thanks to better-than-expected opex. He adds, however, that he is less disappointed than the stock market because “the company’s pipeline continues to evolve nicely, and there is plenty of room for margin expansion driven by strong stable revenue growth and/or additional redeployment of capital for M&A while simultaneously increasing R&D spend to accommodate a rapidly advancing and exciting pipeline.”

Referring to the highlights, Schimmer says CELG noted progress with EU frontline myeloma reimbursement for Revlimid, the company’s drug for treating multiple myeloma, and a strong launch of the drug in Germany. He added, “A number of combo/triplet trials in myeloma will further entrench Revlimid and point to growth due to extending PFS in these regimens and support further adoption of the treat-to-progression treatment paradigm.”

Schimmer also talks about the sluggish performance of Abraxane, a medicine used for treating breast cancer, because of competitive dynamics. However, he’s hopeful that some ongoing trials of Abraxane may reinvigorate the product through label expansion.

Talking about the risks involved in achieving the price target, he points to patents and expansion of Revlimid, new product launches, and pipeline programs. Schimmer also notes that the company has maintained their guidance for revenue and proforma EPS, but lowered their GAAP guidance.

Joshua Schimmer has rated Celgene’s stock 7 times and has a success rate of 33% with an average return on the stock of 6.2%. Out of 5 analysts polled by TipRanks who have recently rated Celgene’s stock, all of them have given a unanimous Buy rating on the stock. The average price target for the stock is $149.60, marking a  28% potential upside from where shares last closed.

CELG Consensus

Incyte Corporation

Last week Incyte Corporation presented the data for the combination drug epacadostat and pembrolizumab at the Society for Immunotherapy of Cancer (SITC) conference. Following this development, Piper Jaffray analyst Joshua Schimmer weighed in with an Overweight rating and a price target of $135.00.

Incyte revealed that in a patient pool of 19, the overall response to the combination therapy was 53%, compared to a smaller patient pool of 7 with a 57% overall response. It also noted that 78% of patients evaluable for PD-L1 status are positive. Joshua responded, “While they certainly did not promise it would be identical, the small drop in response rate combined with the high rate of PD-L1 positive patients narrows the gap between what one might have seen with pembrolizumab alone vs what the combo is showing.” Incyte is set to conduct a Phase III trial of the combination drug. Schimmer added, “Hopefully as the dataset evolves, our confidence will start to improve again.”

Incyte’s lead drug Jakafi, used in the treatment of myelofibrosis (MF) and polycythemia vera (PV), has been performing well. The analyst cited several factors contributing to his overweight rating, including good performance of Jakafi in MF/PV, potential future success of Jakafi in solid tumors, confidence in the PI3K/JAK inhibitor program for B-cell malignancies, and confidence in the CSO, Reid Huber.

Joshua Schimmer has rated Incyte 8 times with a success rate of 38% and an average return of +2.4% per recommendation. Of the 8 analysts polled by TipRanks who have rated Incyte in the last 3 months, all 8 have recommended a Buy on the stock with no bearish sentiments. The average 12-month price target for the stock is $129.71, marking a 29.44% potential upside from where shares last closed.

INCY Consensus


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