Summary
For 2018, both Celgene and AbbVie expect approximately 15% revenue growth.
Both Celgene and AbbVie have low PEG ratios of 0.54x and 0.76x, respectively.
Wall Street is more bullish on Celgene and expects 19% upside potential based on an average price target of $112.73.
Celgene (CELG) and AbbVie (ABBV) are the two fastest growing large-cap pharma stocks. Both companies are heavily reliant on one drug, Revlimid for Celgene and Humira for AbbVie. Even considering concentration risk for each, I consider both as good buys right now, but I'd give the slight edge to Celgene for the following reasons:
- Revlimid is fully patent protected until 2022 and then partially protected until 2026, which gives Celgene more time to diversify its revenue stream. AbbVie's Humira is protected until 2022 and will likely see competition from biosimilars before that.
- Celgene has a higher expected growth rate, which should help close the gap on some of its weaknesses relative to AbbVie, which includes its free cash flow production and leveraged balance sheet.
- Celgene has a class-leading PEG ratio of 0.54x, indicating a deep discount relative to AbbVie and peers.
Operating Performance - Winner: Draw
Both companies have shown impressive performance over the last couple of years. For 2018, each company expects records across all operating metrics and on pace for approximately 15% revenue growth.
