Biopharmaceutical stocks will never show up on a value investor's stock screen; the average trailing-12-month P/E ratio of the top five biotechs is greater than 120. Drug maker Celgene
For the quarter, revenue was up 84%, to $275 million, and gross margins gained more than 500 basis points, to 87%. Measuring biotech bottom-line results is always a little tricky, since companies like to back out all sorts of non-cash expenses, but Celgene's adjusted earnings were up sixfold to $0.18 a share in the fourth quarter. To see more of Celgene's Foolish financials, look here.
In 2007, Celgene is guiding for revenue to rise more than 40%, to around $1.3 billion, and for adjusted earnings to almost double to $1 a share, compared to the $0.53 a share it earned in 2006. Although it probably won't contribute meaningfully to the top line this year, because of the months it takes to set up reimbursement in many countries, Revlimid may get European Union marketing approval. The other interesting pipeline news this year will be the initiation of more clinical trials with Celgene's other thalidomide analogue, CC-4047.
On the negative side of things, this quarter marked the start of a patent fight with Barr Pharmaceuticals
Biopharma investors know it's not the past that matters the most in this sector; it's the outlook. And while Celgene's 2007 adjusted earnings multiple seems high at nearly 54, Revlimid will provide it with years of growth, and that multiple will come down.
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