Has Celgene Corporation Run Out of Steam in 2014?http://www.fool.com/investing/general/2014/03/09/has-celgene-corporation-run-out-of-steam-in-2014.aspx Peter Stephens
March 9, 2014
Last year was a fantastic one for Celgene (NASDAQ: CELG) shareholders. Shares rose by 117% -- easily beating the S&P 500, which still managed to post a very respectable gain of just under 32%. Furthermore, Celgene was able to beat two of its biotechnology sector peers, Alexion (NASDAQ: ALXN) and Amgen (NASDAQ: AMGN), which both had slightly disappointing years (at least on a relative basis); they gained 44% and 34%, respectively.
However, in the first part of 2014, it seems as though Celgene has lost some momentum. Shares have fallen by more than 7% and have underperformed the S&P 500, as well as its two previously mentioned biotechnology peers (Alexion is up a whopping 26% and Amgen is up more than 7% year to date). After a bad start, is it too late for Celgene to make a strong recovery and outperform its rivals (and the broader market) in 2014?
Among the products that contributed to double-digit sales growth were Abraxane, a cancer treatment, whose sales increased by 90% in the fourth quarter following increased use in non-small cell lung cancer and pancreatic cancer, while in Europe the drug saw market share gains in metastatic breast cancer. In addition, Revlimid (Celgene's best-selling drug) posted sales growth of 14% in the quarter because of market share gains and an increased duration of therapy.
Therefore, a share slide of more than 7% this year appears to be more likely a result of profit-taking after a very strong 2013 and also some slight disappointment that the company narrowly missed its fourth-quarter EPS forecast, as opposed to doubts surrounding Celgene's future prospects. On that topic, Celgene is forecast to continue to deliver impressive levels of EPS growth in 2014 and 2015, with it set to grow by 23% in 2014 and by 32% in 2015. When combined with a forward price-to-earnings ratio of 16.3 (to the end of 2015), this translates into an impressive five-year price/earnings-to-growth, or PEG, ratio of 0.88.
Elsewhere in the sector
The main reason for the increased sales of Soliris is additional marketing approvals that Alexion