The company
Celgene Corporation is a biopharmaceutical company. Its business is specialized in research and developments in treatment of cancer and inflammatory diseases. The company's main source of revenues is generated by sales of such products as REVLIMID, VIDAZA, Thalomid (including thalidomides Celgene and Pharmion), ABRAXANE and ISTODAX. Additional revenues are generated by sales of FOCALIN for Novartis Pharma AG (Novartis).
On 15 January 2010 CELG acquired Gloucester Pharmaceuticals, Inc (Gloucester), a private pharmaceutical company. On 15 October 2010 the company acquired Abraxis BioScience, Inc (Abraxis).
Investment idea
We believe the company has rather strong fundamentals. Its strengths include high growth rates of earnings, and a solid financial position with a reasonable level of debt.
Growth of earnings was 6.4% above the sector average. Earnings grew 37.3% in the last quarter as compared to same period last year. Debt-to-equity ration is 0.28 and is currently below the sector average. The company also demonstrated impressive EPS growth in the past 2 years. We believe this tendency will keep on and the company will face no financial difficulties in the near future. If the market is to grow, we support CELG will show a yield above the wider market index.
Potential trading plan
An accumulation phase has been obvious in the past 2 years. Share prices stayed within the $50-60 trading range. The company's fundamentals and financial condition were improving, but the price did not react accordingly. We believe prospective demand has been created to raise share prices in the medium term in conditions of a favorable growth of the wider market index. That the price started getting a foothold above $60 serves as a confirmation. This is why we suggest creating a position near this level as a conservative entry. It is recommended to wait for a correction to make a more aggressive entry and, when if finishes, build up your positions. A potential resistance level is at $62.5-65.
The company's revenues demonstrate sustainable growth. The company showed a 35% improvement in EPS in the previous quarter as compared to last year's quarter. We expect CELG to show a $1,07 EPS growth in the next reporting quarter.
The company's quarterly sales demonstrate a sustainable uptrend. The company's sales growth supports its EPS growth. Sales added 39% in the previous growth quarter. We expect sales to grow to $1.300 (In Millions of USD) in the next reporting quarter.
The annual EPS shows fast recovery rates after the recession. We believe the long-term earnings growth rates will accelerate in the year to come to +80%.
The company's sales were not affected by the recession and showed sustainable growth. Revenues are expected to grow by +30% by end of 2011.
Main financial figures of the company
P&L statement
Balance sheet
Cash flow statement
Department of Portfolio Investments at the .
