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Celgene Issues Preliminary 2016 Results, Lifts 2017 View

Zacks

Celgene Corporation CELG announced preliminary 2016 results and upped the guidance for 2017, while maintaining its outlook for 2020, at the J.P. Morgan Healthcare Conference. The company also provided a business update at the conference.

Celgene’s share price movement shows that the stock has outperformed the Zacks classified Medical-Biomedical and Genetics industry in the past one year. Specifically, the stock has gained 16.7% during this period, compared with a decline of 12.8% for the industry.

Celgene expects adjusted earnings for 2016 to be approximately $5.94 per share, reflecting a year-over-year increase of 26%. Net product sales for 2016 are expected to be approximately $11.2 billion, up 22% year over year. The Zacks Consensus Estimate for earnings is pegged at $5.27 on revenues of $11.3 billion.

Sales of Revlimid, the key growth driver at Celgene, are projected to be approximately $7 billion, reflecting a year-over-year increase of 20%. While Pomalyst/Imnovid sales are expected to barely exceed $1.3 billion (up 33%), sales of Otezla, which is in the second year in the market, is anticipated to cross the $1 billion mark (up a substantial 116%). Abraxane sales are expected to inch up 1% to $973 million.

Adjusted operating margin is expected to be about 55% for 2016, reflecting an increase of 290 basis points (bps) from the year-ago period.

Celgene is scheduled to announce fourth-quarter 2016 and full-year results on Jan 26.

2017 Outlook Upped


Celgene raised the outlook for 2017. For 2017, Celgene now expects earnings in the range of $7.10–$7.25 per share, reflecting a 21% year-over-year increase. Previously (at the time of announcing third-quarter 2016 results), the company had guided earnings at the high end of the $6.75–$7.00 per share range.

Total revenue is now projected to be approximately $13.0 billion to $13.4 billion, representing an 18% increase. Earlier, the company had anticipated revenues at the high end of the $12.7–$13 billion range. Unfavorable foreign exchange is expected to impact revenues by about $170 million in 2017.

The Zacks Consensus Estimate for earnings stands at $6.52 on revenues of $13.2 billion.

Revlimid sales are now expected in the range of $8.0 billion to $8.3 billion, compared with the previous expectations of greater than $8 billion. Abraxane sales are still estimated to be around $1 billion.

While Pomalyst/Imnovid sales are anticipated to be approximately $1.6 billion, Otezla sales are projected in the range of approximately $1.5 billion to $1.7 billion.

Adjusted operating margin will continue to improve to about 56.4% in 2017.

2020 Outlook Maintained

Celgene has maintained its outlook for 2020. It continues to project net product sales in excess of $21 billion. Moreover, adjusted earnings are expected to cross $13 per share.

Celgene said of the 14 candidates that are currently in development, 10 have billion-dollar potential while four have multi-billion-dollar opportunities. Celgene expects to seek FDA approval for ozanimod for relapsing multiple sclerosis by the end of 2017.

The company expects 2017 through 2018 to be dominated by news related to its pipeline and label expansion efforts.

Celgene Corporation Price and Consensus

Zacks Rank & Stocks to Consider

Celgene currently carries a Zacks Rank #4 (Sell). Some better-ranked stocks in this industry include Kite Pharma, Inc. (KITE), Epizyme, Inc. (EPZM) and Intra-Cellular Therapies, Inc. (ITCI). All the three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Kite’s loss estimates narrowed 2.1% and 0.2% for 2016 and 2017, respectively, over the last 60 days. The company posted a positive surprise twice in the four trailing quarters with an average beat of 7.89%.

Epizyme’s loss estimates narrowed 3% and 2.4% for 2016 and 2017, respectively, over the last 60 days. The company posted a positive surprise in each of the four trailing quarters, with an average beat of 14.03%. Its share price gained approximately 17% in the past one year.

Intra-Cellular Therapies’ loss estimates narrowed 6.6% for 2016, over the last 60 days. The company posted a positive surprise in each of the four trailing quarters, with an average beat of 15.43%.

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