Top Picks 2017: Celgene
01/23/2017 6:00 am EST
My Top Pick among large cap stocks is a firm that should be known to just about every biotech investor; I can think of no other large cap biotech that has a clearer earnings growth trajectory over the next 3-5 years, notes Bret Jensen, editor of Investor Alley's Biotech Gems.
Celgene (CELG) is not going to be “home run” investment, but I expect it to continue to deliver “singles” every year with an occasional “double” in some years.
Celgene’s current growth is powered by blockbuster blood cancer drug Revlimid that continues to grow at a nice clip. It should post sales around $7 billion this year and $8 billion to $8.5 billion in 2017.
It has several other compounds that do $100 to $300 million a quarter in sales as well.
As exciting as the company’s internal growth and pipeline development is, it might be its collaboration deals that turn out the core growth driver in the years ahead.
Celgene basically plays “venture capitalist” to much of small cap biotech world. It has dozens of collaboration deals across over a half dozen core disease areas.
If some small cap firm develops a blockbuster drug in the next few years, it is quite likely Celgene will own a significant portion of that compound.
After posting earnings of just under $4.75 a share in fiscal 2015, Celgene should deliver almost $6 a share in profits when fiscal 2016 is closed out and just over $7 a share in fiscal 2017.
Most analysts have the company earning between $11 and $12 a share by fiscal 2020. Its own goals are for $13 a share in profits by then. Trading at about $120 a share, that profit growth can be had at an attractive entry point.