Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Celgene Shares Shouldn't Be on Sale

The market can be a fickle beast, as investors in biopharma giant Celgene (Nasdaq: CELG  ) found out last week. Shares have been down more than 5% since Wednesday after a perceived revenue miss in its third-quarter earnings report.

Perhaps yet another reason to ignore earnings guidance (or at least the reaction in a share price when it changes slightly), the worry about Celgene was that it reduced full-year 2007 revenue guidance from its "$1.4 billion range" of last quarter to $1.375 billion.

This is a measly $25 million revenue shortfall, for those who are stingy enough to even count the new top-line guidance as outside of its previous range. Even with the "lowered" guidance, Celgene affirmed its adjusted earnings-per-share forecast at the top of its previous range of $1.00 to $1.05.

Getting into the third quarter's results, revenue was up 43% versus last year as REVLIMID experienced 97% growth with on- and off-label sales in different blood disorders. Adjusted EPS showed the kind of scale usually only seen from tech and drug developers: up 93% versus the third quarter of last year to $0.29 a share

Another source of angst for analysts was whether REVLIMID would continue its torrid sales growth, considering it has solid market share in the treatment of myelodysplastic syndromes -- a disease of the bone marrow -- and multiple myeloma in the U.S., where it competes with Rule Breakers pick Millennium Pharmaceuticals (Nasdaq: MLNM  ) .

Celgene countered these worries by noting that the European market for REVLIMID is only just beginning to come on line, with European revenues accounting for 11% to 19% of REVLIMID sales, and that market saturation won't start to occur until "late 2008" at the earliest. There are also the numerous label expansions into even solid tumors, which could re-energize REVLIMID sales beyond this date.

The larger point here is that slightly decreasing the full-year 2007 revenue forecast is minuscule relative to Celgene's long-term value drivers like the potential label expansions with REVLIMID and progress for its other next-generation drugs.

Revenue miss or not, shares of Celgene aren't on my biopharma buy list because there's so many other exciting drug developers out there, but some investors likely just got the unjust discount on shares of Celgene that they were waiting for.

Read/Post Comments (0) | Recommend This Article (8)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 539340, ~/Articles/ArticleHandler.aspx, 10/21/2016 4:20:04 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,145.71 -16.64 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/21/2016 4:00 PM
CELG $98.91 Down -1.11 -1.11%
Celgene CAPS Rating: *****
MLNM.DL $24.97 Down +0.00 +0.00%
Millennium Pharmac… CAPS Rating: No stars