Despite the tremendous run the biotech sector has had over the past five years, many of the top stocks, especially the large cap leaders, trade at multiples that mimic low-growth big pharmaceutical companies. In a new and very comprehensive report, Jefferies starts coverage on the sector with some very targeted stock selections.
Brian Abrahams, who is highly regarded as a top biotech analyst, joins Jefferies and starts coverage on 13 stocks. We screened the stocks rated Buy at Jefferies, and three of the companies make very good sense for aggressive accounts now.
This company is one of the top picks at Jefferies, which feels this large cap stock has solid upside potential for 2015 and next year. Celgene Corp. (NASDAQ: CELG) has an outstanding partnered pipeline, which the firm thinks is low risk and has the potential to yield several blockbuster drugs. The analyst also thinks the company can grow earnings 15% on a compounded annual growth rate basis going forward.
The company provided strong guidance earlier this year surrounding its Otezla launch and encouraging feedback from doctors on the potential of new triplet regimens in myeloma. Analysts across Wall Street are raising their estimates for the drug as after a little more than a year on the market. Otezla, which treats psoriasis and psoriatic arthritis, has achieved considerable prescriptions among physicians.
Celgene’s blockbuster blood cancer drug Revlimid continues to dominate. Pomalyst sales grew nearly 46% year over year last quarter. Cancer drug Abraxane is also growing at a respectable rate, so the company continues to have a strong lineup of top-selling drugs. While second-quarter numbers were solid, the rest of the year could prove to be better.
The Jefferies price target for the stock is $140. The Thomson/First Call consensus price target is $149.83. Shares closed on Thursday at $122.97.