MM020/EU 1st line adds incremental $3.31-$7.71 to CELG EPS-CITI (AMAZING)
AMAZING - Citi says good MM-020 data/front line EU approval could add anywhere from $3.31 to $7.71 INCREMENTAL EPS...there's that OPERATING/EPS LEVERAGE ON INTERNATIONAL & INDICATION EXPANSION thing I have been posting about for yrs.....
High Leverage to EPS Could Boost the Stock
– We project that Revlimid sales in 1st line myeloma will have an 82% operating margin. Assuming 12-24 months treatment duration and 30%-50% market share, the potential boost to EPS can reach $3.31-$7.71.
If we attribute a 10x multiple to 2016 EPS ests (the current multiple) discounted back by10% to 2013, the potential boost to the stock is in the range of $25-$58 per share.
Hence, the current consensus view that MM-020 is already largely factored in the stockmight be incorrect as the market might be under appreciating the (1) size of the market,and (2) the high operating margin leverage in the model.
Analysis of Past Ests Support This View
– We analyzed our financial projections of
future Revlimid sales in our models going back to 2005. Our conclusion is that the
myeloma market ended up much bigger than we originally anticipated and this supports
our view that the 1stline myeloma market will also be much bigger than thought. We ests
that there are 67k first line myeloma patients in Europe and this translates into a lucrative
opportunity when factoring in 12-24 months treatment durations in that setting.
This stock is significantly undervalued. After AAD Mar 2-3 it will be $107 area imo - after MM-020 it will SPRING to $125+ and never look back. $3 to $7 incremental EPS - that is amazing. And this stock is still at a 0.8 PEG as RC says - vs 1.3 AMGN/BIIB. Add every dip