Summary
Celgene increased 2018 revenue expectations for the second time this year as strong growth continues.
Celgene's rock-bottom Forward P/E of 6.59x and PEG Ratio of 0.39x help alleviate risk over Revlimid sales concentration.
Wall Street hasn't given up on the stock and expects 60% upside potential based on a consensus target price of $108.77.
Celgene's (CELG) falling stock price is in stark contrast to its actual performance. I love it when a company continues to deliver on its promises, yet the stock gets crushed on irrational fears. That's when you'll find the best buying opportunities for a stock. As discussed in its latest earnings release, Celgene just raised its full-year revenue guidance to $15.2 billion, up from $15 billion previously. The company also increased its outlook for adjusted earnings to $8.75 - $8.80 per share, up from $8.70-$8.75. This has mostly been a result of blockbuster, Revlimid, sales remaining on track and better-than-expected sales from Otezla. I view Celgene as the best valued stock out of all biotech stocks. My opinion is based on the following factors:
- Celgene has the highest growth rate out of large-cap peers, yet has the lowest Forward P/E ratio, which has led to a PEG of only 0.39x.
- Revlimid patent cliff fears are overblown. Even in a worst-case scenario, the stock's valuation is still reasonable.
- Wall Street analysts have a price target of $108.77, which represents 60% upside potential in the stock.
