RBC Capital Views Celgene (CELG), Juno (JUNO) Deal as Incremental Positve

RBC Capital maintained an Outperform rating on Celgene (NASDAQ: CELG) with a price target of $135. Analyst Michael J. Yee said he sees yesterday's $1 billion deal with Juno Therapeutics (NASDAQ: JUNO) as an incremental positive despite investor "sticker shock."

"While many investors have some sticker shock to the $1B in JUNO stock that CELG just acquired at a 100% premium ($93/share) to collaborate and partner with JUNO, we maintain our positive long-term view and stance on the deal that quite simply: CELG is prepared to take a risk on big ideas that "could" turn out to be critical and important pipeline programs over the long run beyond 2020+. We appreciate that there isn't much data on CAR-T beyond CD-19 and data has not yet played out in solid tumors and it's all early-stage," said Yee.

"But if we all agree that CELG needs to find blockbuster drugs post 2020-2023+ when Revlimid starts to mature (or risk of genericization post 2023-2026), then long term investors should generally applaud the aggressive move into partnering a major platform technology for cancer over the long run. Will CELG find all blockbuster drugs inexpensively? Remember that BMY paid $2.4B for Medarex in 2009 and at the time it was viewed as very expensive....and out came Yervoy and PD-1....," added the analyst.

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 $114.91 yesterday.

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