Earnings Scorecard: Celgene

Following the release of the first quarter 2011 results on April 28, 2011, there have been significant revisions to the annual estimates for Celgene Corporation (CELG) for 2011 and 2012 by a majority of the analysts.

Revisions have a significant upward bias for 2011 and 2012. We believe that the upward bias is primarily due to the strong results delivered by Celgene in the first quarter of 2011, driven by its cancer drugs Revlimid and Vidaza.

First Quarter Highlights

Celgene’s first quarter 2011 earnings (excluding special items but including stock-based compensation expense) of $0.71 per share were below the Zacks Consensus Estimate by $0.02 but exceeded the year-ago earnings by $0.17. On a reported basis (including special items), the company’s earnings increased 8% to $0.54. Higher revenues boosted earnings in the quarter.

Adjusted revenues climbed 40% to $1.11 billion in the first quarter of 2011. Revenues were boosted by the impressive performance of Celgene’s cancer products Revlimid and Vidaza. Revenue for the quarter surpassed the Zacks Consensus Estimate of $1.08 billion.

Revlimid net sales came in at $738 million, reflecting an increase of 39% over the year ago period. Vidaza continued to perform impressively. Net sales of the drug for the reported quarter came in at $163 million, an increase of 36% over the first quarter of 2010. Bulk of its sales came from international markets.

(Read our detailed earnings report at: Sales Swell at Celgene)

Agreement of Estimate Revisions

There is a significant positive bias in the estimate revisions for 2011 and 2012 over the last 30 days. Over the last 30 days, 6 of the 9 analysts following the stock for 2011 have upped their earnings estimates with a single downward movement. For 2012, 6 analysts have upped their estimates with 3 moving in the opposite direction.

Following the impressive performance in the first quarter of 2011, driven primarily by Revlimid and Vidaza, Celgene upped its guidance for 2011. In 2011, the company expects to earn in the range of $3.35-$3.40 per share (on an adjusted basis) on revenues of $4.45 billion to $4.55 billion.

The previous guidance was $3.30 to $3.35 per share (on an adjusted basis) on revenues of $4.4 billion-$4.5 billion. Most analysts covering the stock raised their estimates for 2011 following the company’s improved guidance.

Celgene’s efforts to expand and strengthen its portfolio are also encouraging. Celgene boosted its oncology portfolio further by purchasing Gloucester Pharmaceuticals and Abraxis BioScience in 2010. Moreover, Celgene’s endeavor to expand the label of key cancer drugs, such as Revlimid and Istodax, is also a step in the right direction.

Magnitude of Revisions

The estimate for 2011 have gone up by $0.05 over the last 30 days. The current Zacks Consensus Estimate is $3.09. 2012 estimate is up $0.02 to $3.73 over the last 30 days following movements in both directions.

Our Recommendation

We prefer to remain on the sidelines until more visibility is available regarding the pipeline development and label expansion efforts at Celgene. Consequently we are Neutral on the stock in the long-run. Celgene carries a Zacks #3 Rank (Hold rating) in the short-run.

CELGENE CORP (CELG): Free Stock Analysis Report

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