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Celgene (CELG): Only 1/3 Of Revenue Increase Was From Price, Raising PT - Leerink

July 29, 2016 9:32 AM EDT
Get Alerts CELG Hot Sheet
Price: $108.24 --0%

Rating Summary:
    7 Buy, 27 Hold, 0 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 13 | Down: 11 | New: 11
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Leerink Partners analyst, Geoffrey Porges, reiterated his Market Perform rating on Celgene (NASDAQ: CELG) and increased his price target to $135.00 (from $125.00). CELG reported Q2 2016 results with a 2% beat on total revenue and revenue growth of 21% yoy . The company disclosed that only 6%, or roughly one-third, of annual revenue growth was related to net price increases (although flagship Revlimid did benefit from 11% list price increases in the US compared to the prior year).

Total product sales of $2.75bn, increased 22% yoy and were bolstered by continued solid demand growth for Revlimid, which grew by 18% yoy and 8% qoq. Growth outside the US continues to lag (9% vs 24%) although price is much of the gap. US Revlimid sales of $1.1bn beat consensus by 5%. Pomalyst was stated to be gaining share in earlier lines of combination therapy, and grew 35% yoy and 16% qoq. Abraxane, which had reported weak results in prior quarters, rebounded in Q2 with 11% sequential growth driven by a stabilization of immuno-oncology competition in breast and lung cancers. In the inflammation portfolio, Otezla grew 24% sequentially from both extended durations and new volume demand. Celgene now has multiple proven, growing franchises that continue to be supplemented by price—rather than driven by it—and Abraxane highlights the company’s ability to compete in crowded market segments.

The analyst believes that "at this stage Celgene’s portfolio is relatively fully valued, and we are focused on identifying the most important value drivers from its pipeline. At this stage 2017 still looks to have better newsflow and more upside potential than 2016, particularly since the company’s best results typically come in Q2."

The price target increases to $135 from $125 based on higher peer company multiples and slightly higher earnings.

For an analyst ratings summary and ratings history on Celgene click here. For more ratings news on Celgene click here.

Shares of Celgene closed at $111.26 yesterday.



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