“So why do we like Celgene so much, and how come we have time? The main reason I like it is its huge blood cancer drug Revlimid. $1.3 billion sales in 2008. It’s approved by the FDA to treat multiple myeloma. That’s a cancer of the plasma cells and bone marrow. These cancers are horrible…
This could be approved to treat more diseases, help more people and yes, make Celgene shareholders more money. There is a lot of momentum behind Revlimid. Sales are accelerating with several launches this year. Europe hitting the top line, gaining market share in the US. Up 3% in the last quarter over the previous one. Penetration still at only 34%. It’s about to launch in Canada and Latin America. Expected to launch in Australia late in the fourth quarter…
…What I think is going to be a terrific trade, not an investment, a trade ahead of the annual American Society of Hematology meeting. That’s December 5th. Write that down. Celgene’s going to be presenting some terrific Revlimid data there. You got that? Again, no hurry, though. I wouldn’t pull the trigger on this trade until the week before the conference.
Celgene is a fabulous biotech company with a terrific slate of drugs for fighting cancer, especially Revlimid. I even think it could be a takeover target for bigger pharma player looking to expand its oncology business. But as Dan Fitzpatrick’s chart shows us, you don’t have to buy it right here. Let it fill in the gap. You could buy some now if you really wanted, but I would much prefer you wait for a pullback …” — CNBC’s Mad Money 11/3/2009
Cramer talked about one of his favorite Biotech companies on his Off the Charts segment on Tuesday’s Mad Money. As viewers are aware, Cramer considers himself a fundamental analyst, but he still believes that there is value in understanding the technicals of a stock, for this he turns to Dan Fitzpatrick. From the technical perspective, Fitzpatrick believes Celgene (CELG) is a buy, but it could face some near term weakness. From reading the charts, this stock would be worth buying around the key support line of $48.
Looking at Celgene from the perspective of a fundamental analyst, this stock is attractive according to our methodology at Ockham. Revlimid has already surpassed the blockbuster status with more than $1 billion in sales and may have much more growth potential with better penetration and more uses. Celgene’s growth rate is already attractive, but it still has room to expand in other markets around the world. For long term investors, this stock is Undervalued anywhere under $55, but we believe that with the sales strength and earnings growth of Revlimid, CELG could be worth $70.
Cramer, who often views stocks in a much shorter time frame than we do, thinks that this stock may be a better trade than investment. His belief is that the stock will get a nice boost from a solid showing of Revlimid at the American Society of Hematology in December. He would buy the week before the meeting and look to sell after a quick pop. At Ockham, we think it is far too difficult to predict these sorts of trades as so much can change before then, but if you can get Celgene under $55 then it presents a decent value.