Celgene (CELG) Too Cheap to Ignore: JPMorgan; Rating Raised to Overweight

(Updated - October 1, 2015 9:21 AM EDT)

JPMorgan upgraded Celgene (NASDAQ: CELG) from Neutral to Overweight with a price target of $152. Analyst Cory Kasimov described the stock as "too cheap to ignore" and noted the company's impressive strategy and overall strong fundamentals.

"While a lack of obvious clinical catalysts has previously kept us on the sidelines, we view CELG as one of the most fundamentally sound biotechs that has done a nice job of addressing next decade revenue gaps through BD. With the recent market pullback, we believe CELG’s current valuation is simply too compelling to remain on the sidelines," said Kasimov.

"While CELG trades at a higher 2016e P/E multiple (19x) than large cap biotech (14x) and large pharma (17x), we note that it also has significantly higher growth potential (2 year EPS growth of 26% vs. 13% for large cap biotech and 15% for pharma); thus CELG trades at the lowest level on a PEG basis. Furthermore, this attractive growth extends longer term with a 5 year CAGR of 24% vs 11% for large cap biotechs and 13% for pharma," continued the analyst.

Kasimov added, "CELG not only has an impressive proprietary pipeline, but it is also focused on partnering/acquiring assets with cutting-edge innovation. We are confident in the company’s ability to parse out potentially first-in-class/best-in-class products to support long-term growth. Additionally, the slew of BD deals completed over the past year has given us a boost of confidence in management’s execution and vision beyond 2020. With increasing cash flows driven by Revlimid and other commercial assets, we suspect more BD deals are on the horizon."

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 $108.17 yesterday.

SI NOTE: This report was tagged as 'Hot Upgrade' at StreetInsider Premium given the actionability of the call. StreetInsider Premium members can see more under this category and be alerted to new posts under this category here: http://www.streetinsider.com/Hot+Upgrades

You May Also Be Interested In

• Evercore ISI Upgrades First Solar (FSLR) to Outperform
• Canaccord Genuity Upgrades Gatos Silver (GATO) to Buy
• Compass Point Upgrades Truist Financial (TFC) to Buy