Celgene Corporation’s (CELG) third quarter 2011 earnings (excluding special items but including stock-based compensation expense) of $0.90 per share beat the Zacks Consensus Estimate by $0.04 and the year-ago earnings by $0.25. On a reported basis (including special items), the company’s earnings increased 35% to $0.81. Higher revenues boosted earnings in the quarter.
Total revenues climbed 37% to $1.25 billion in the third quarter of 2011. Revenues were boosted by the impressive performance of Celgene’s cancer products Revlimid and Vidaza. Revenue for the quarter surpassed the Zacks Consensus Estimate of $1.21 billion.
Revlimid net sales came in at $820 million, reflecting an increase of 28% over the year ago period. The drug did well both in the US and also in international markets.
Vidaza continued to perform impressively. Net sales of the drug for the reported quarter came in at $191 million, an increase of 35% over the third quarter of 2010. Bulk of the revenues came from international markets. Sales in the international markets climbed 58% to $118 million. Vidaza lost exclusivity in the US in May 2011. In spite of the development, Vidaza sales climbed 10% to $73 million in the US during the third quarter of 2011.
However, net sales of another cancer drug, Thalomid, continued to decline due to the availability of better alternatives. Thalomid sales were $83 million, down 12%. Net sales of Abraxane, added to the portfolio with the October 2010 acquisition of Abraxis BioScience, were $114 million in the third quarter of 2011, up 20% sequentially.
Research and development (R&D) expenses (excluding stock-based compensation and other special items) climbed 32.3% to $307 million in the reported quarter. The increase was primarily attributable to Celgene’s efforts to expand its pipeline.
Selling, general and administrative expenses (excluding stock-based compensation and other special items) in the quarter increased approximately 35.3% year-over-year to $276 million. Costs associated with the launch of cancer drugs Revlimid in Japan, Istodax in the US and Abraxane in the European Union and US primarily led to the rise in SG&A expenses. Acquisition related costs were also responsible for the increase.
2011 Forecast Upped
Following the release of third quarter results, Celgene upped its guidance for 2011. In 2011, the company expects to earn in the range of $3.78-$3.80 per share (on an adjusted basis) on revenues of $4.80 billion to $4.85 billion. The previous guidance hinted at adjusted earnings in the range of $3.45-$3.55 per share on revenues of $4.60 billion to $4.70 billion. The Zacks Consensus Estimate for 2011 currently stands at $3.25 per share.
Revlimid sales are expected to contribute the lion’s share to total revenues. Sales of the cancer drug are expected in the range of $3.20 billion to $3.25 billion.
Our Recommendation
We currently have an Outperform recommendation on Celgene. We view the decision of the European Committee for Medicinal Products for Human Use (CHMP) that the benefits associated with Revlimid outweigh the risks in patients suffering from multiple myeloma as a positive for the stock. The favorable opinion has removed a major overhang for the stock since Revlimid is Celgene’s key growth driver.
We are also impressed by Celgene’s impressive oncology portfolio, efforts to expand further, strong balance sheet and strong pipeline. These positive catalysts cause us to believe that Celgene will continue performing impressively. We believe that the current price represents an attractive entry point for long-term investors.
Our optimism is justified by the Zacks #1 Rank (Strong Buy rating) carried by the stock in the short run.
CELGENE CORP (CELG): Free Stock Analysis Report
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment