Celgene Corporation (NASDAQ:CELG) has been one of the worst-performing big biotech stocks of the past year even though the company has consistently reported impressive profit growth. While it's run into some embarrassing problems with late-stage programs in the recent past, there are plenty of potential growth drivers winding their way through its pipeline. 

Has the recent beating gone too far and created a bargain opportunity? Let's see if Celgene has what it takes to keep delivering growth for many years to come.

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Why investors are nervous

The stock has fallen around 50% since the beginning of October 2017 due to one overarching problem, Revlimid, which makes up 63% of total revenue will begin facing generic competition in 2022. During the company's third-quarter earnings call, the company also promised to limit future increases to its drugs, an important source of growth that investors aren't sure the company can replace.

Its total revenue growth came in at $1.7 billion during the first nine months of 2018, $1.1 billion of which came from Revlimid. The multiple myeloma treatment is on pace to generate $10 billion annually, but further gains will be harder to come by. Over the past five years, Celgene has increased Revlimid's price by more than 10% annually. In July, the company raised Revlimid's price by just 5.3% and said it wouldn't raise it further this year.

Celgene's depending on a robust pipeline of new drug candidates that it's acquired with Revlimid profits over the years, but a phase 3 failure last October and an embarrassing mistake with a Food and Drug Administration application have forced investors to question whether the company can actually pick a winner and carry it across the finish line.

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Reasons to buy

Celgene has given investors plenty to worry about several years from now, but it looks like we can expect significant growth on the top and bottom lines for at least a few more years. Last year, the FDA approved Revlimid for long-term maintenance treatment of multiple myeloma patients following stem cell transplants. Long treatment durations from this group and others boosted third-quarter U.S. Revlimid sales 22% higher than last year.

Though year-to-year gains above 20% might not be possible without big price hikes in the future, the treatment is growing fast enough on its own to deliver heaps of profits to shareholders over its limited remaining lifespan. At recent prices, Celgene shares are trading at just 8.3 times this year's earnings expectations. That means for each dollar spent on shares today, the company is expected to deliver $0.12 in profits in the year ahead.

Celgene plows a lot of the profit it generates back into the development of tomorrow's blockbuster hopefuls, but it also returns a great deal to shareholders in the form of share buybacks. Its board of directors has approved a grand total of $28.5 billion in share buybacks since 2009 and used $6.1 billion to repurchase shares in 2018. That's been enough to lower Celgene's outstanding share count by 11% since last October.

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In the pipeline

Celgene's ozanimod application will reach the FDA later than hoped, but a submission for treatment of multiple sclerosis (MS) is on deck for the first quarter of 2019. Expectations have fallen due to a long delay, but the experimental treatment still has a chance to reach $1 billion annually from the MS indication. We'll know if ozanimod has a chance to expand to the much larger ulcerative colitis population when the company announces top-line data from an ongoing pivotal study in 2020.

Investors will want to keep an eye open for luspatercept, a red blood cell boosting agent Celgene is developing in partnership with Acceleron Pharma Inc. (NASDAQ:XLRN). This year, the partners reported top-line success during two pivotal studies, one as a treatment for myelodysplastic syndromes and another study with transfusion-dependent beta-thalassemia patients. The experimental treatment could go on to generate more than $2 billion annually as a treatment for these indications. We'll know more about its future when investigators present more details at a medical conference in December. 

Before the year is through, Celgene also expects to submit an application for fedratinib, an experimental drug that Sanofi discarded years ago. Fedratinib has since cast aside its association with a dangerous neurological condition that sidelined it in the past. If approved, it could become a blockbuster new treatment for myelofibrosis patients in need of new options.

A bargain

It looks like we can expect Celgene's top line to grow by a double-digit annual percentage through 2022, and then slide for a couple of years before plunging. Celgene's deal with Natco Pharma allows limited generic competition for Revlimid that starts slow and doesn't rise to a full assault until 2026.

If Celgene can avoid late-stage disasters for another couple years, there's a chance the company can keep the needle moving forward when smoothed out over the coming decade. At just 8.3 times forward earnings right now, the stock looks like a real bargain.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.