Higher 2017 Celgene Guidance Keeps Confusion in Near-Term

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Celgene Corp. (NASDAQ: CELG) has been one of the top performing biotech giants of late, and now we have some confusing guidance for 2013, 2014 and 2015. The company has issued its preliminary numbers ahead of its presentations at the 32nd Annual J.P. Morgan Healthcare Conference. Investors should understand that there is some confusion over near-term guidance, which hit the stock a bit. The company will of course ask its holders to focus long-term to its raised targets for 2015 and 2017.

Total revenue for 2013 is expected to be $6.5 billion, based on total net product sales of about $6.4 billion. Adjusted 2013 earnings per share are expected to be $5.96, including a $0.13 per share negative impact from the collaboration related payments made to partners. Thomson Reuters had estimates of $6.43 billion in revenue and $6.00 in earnings per share.

Celgene’s preliminary 2014 guidance is total net product sales of $7.3 billion to $7.4 billion (based on Revlimid sales at $4.9 to $5.0 billion), with adjusted earnings of $7.00 to $7.20 per share. Thomson Reuters has the consensus estimates at a total revenue of $7.43 billion and $7.29 in earnings per share.

Now we are getting a look at 2015 expectations. Total net product sales should be $8.5 billion to $9.5 billion, versus prior guidance of $8.0 billion to $9.0 billion, and adjusted earnings should be $9.00 to $9.50 per share, versus a prior forecast of $8.00 to $9.00 per share. Out in 2017, Celgene is targeting product sales of $13 billion to $14 billion, versus a prior forecast of $12+ billion, and the 2017 earnings per share of close to $15.00 per share, versus a prior $13.00 to $14.00 target.

While guidance actually seems a bit mixed, the company is claiming that its 2013 momentum and confidence in its business model have led it to raise its 2015 and 2017 targets.

The big story for 2013 was Revlimid, with sales rising 14% to $4.28 billion. Abraxane sales rose 52% to $649 million, followed by Pomalyst/Imnovid at $305 million.

The company’s sales growth targets for 2017 are as follows: Revlimid $7 billion versus prior $6 billion; Abraxane $1.5 billion to $2.0 billion (unchanged); Pomalyst/Imnovid $1.5 billion versus $1 billion prior; and Otezla $1.5 billion to $2 billion (unchanged). Another target change for 2017 is gross margin, which was raised to 57% from a prior 55% target.

Celgene shares have seen a mixed reaction to the forecast. Shares were up as high as $174.66 earlier in the day, an all-time high yet again, and shares have also traded down 1.6% to $167.00 after the news. Keep in mind that Celgene’s market cap is just shy of $70 billion.

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