Despite having appreciated 20% in a year, Celgene Corporation (NASDAQ:CELG) shares are still a reasonable buy for growth.
What does Celgene do?
Celgene is a biopharmaceutical company focused on the discovery, development and commercialization of innovative therapies for patients with cancer, immune-inflammatory, and other unmet medical needs. The company operates in more than 60 countries and sells its products in more than 70.
In 2016, Celgene generated sales of $11.2 billion. Its expertise lies in hematology, oncology, and immunology. Here’s an overview of Celgene’s key products:
|Product||2016 Sales (million)||% of 2015 Sales||% of 2016 Sales||YOY growth|
Revlimid remains as Celgene’s core drug from 2015 and its market in the multiple myeloma space is still growing.
Strong pipeline to sustain growth
Celgene has strong growth prospects supported by a quality pipeline, which consists of 42 programs in preclinical development, 40 treatments in clinical trials, and 19 pivotal / phase III programs that are underway.
Its pipeline covers areas of multiple myeloma, myeloid disease, lymphoma and leukemia, solid tumors, and inflammation and immunology.
Management expects revenue growth to remain strong at a CAGR of 16-17% through 2020 (compared to a CAGR of 20% from 2013 to 2016).
The bottom line
Celgene has a history of outperforming the market. Since 2011, it has reduced its share count by about 13% via share repurchases and has maintained high returns on equity of 22-33%. Seeing that it has a strong, quality pipeline, it’s likely it can continue to outperform.
Despite a big run-up, Celgene still looks attractive as a growth investment. It can still deliver double-digit annualized returns of 18-20% for long-term accounts with a horizon of at least three to five years.
This standalone article is primarily an excerpt from my Seeking Alpha article, which you can access for free here: Celgene: A Growth Stock You Don’t Want To Miss
If you like what you've just read, consider subscribing via the "Subscribe Here" form at the top right so that you will receive an email notification when I publish a new article.Disclosure: At the time of writing, I own shares of Celgene.
Disclaimer: I am not a certified financial advisor. This article is for educational purposes, so consult a financial advisor and or tax professional if necessary before making any investment decisions.
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