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Celgene Corp. (CELG) Message Board

  • neednewsii neednewsii Jan 7, 2014 2:31 PM Flag

    Rachel M to the defense.... (BoA ML)

    Why we have a buy rating

    We are reiterating our thesis on CELG following weakness on a competitor

    downgrade, and in particular recommend buying ahead of next week’s 2014



    financial guidance. What we highlight about our views and assumptions:



    (1) We model 33% EPS growth in 2014. Our near $8/sh EPS estimate is based on

    our belief that recently presented data for Revlimid in the newly diagnosed myeloma

    setting will enable US Revlimid market share expansion as well as augment

    treatment duration beginning in 2014. While our 7% market share gain in 2014

    could prove aggressive prior to formal label expansion, we see 3% market share

    expansion as very achievable, and see 2014 EPS in the $7.70-$7.80 range as a

    reasonable base case

    .(2) Apremilast not core to growth story, and consensus buy-side view remains cautious.


    We recently cut our sales estimates for CELG’s impending launch for its

    first oral immune/inflamm drug (apremilast, launch first for psoriatic arthritis) to ~1/3

    of CELG’s 2017 projections, reflecting our cautious view on the product profile. Our

    estimates are low on the Street, but we believe reflect a cautious buy-side view for

    apremilast. Despite this cut, our model still predicts mid-high teens revenue growth

    and mid-upper twenties EPS growth over the next several years

    (3) Company’s long term growth profile not priced in. We currently model 2017





    EPS of $14.61 on a $11.7B revenue base vs. CELG’s guidance of $13-$14 EPS

    and $12B in revenues. We previously stated that we expect CELG to increase its

    revenue guidance to $13B, driven by positive revisions to its hematology franchise,

    with EPS moving to $15-$16/sh. With CELG shares trading at 10x the midpoint of

    this EPS range, concerns that CELG is overvalued appear misplaced.


    (4) Potential for Revlimid generics an important, but tired bear topic. The bear

    thesis on CELG shares for the past 4-5 years has been that generic Revlimid entry

    w

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