Celgene: A breakout in biotechnology?
This biotech company shows strong fundamentals while technically poised to break out to new highs.
Celgene (CELG) produces drugs to treat cancer and immune-inflammatory-related diseases. Its primary commercial-stage products include Revlimid, Vidaza, Thalomid and Abraxande.
Technically, the long-term chart shows the stock soaring from 5 back in 2003 to a peak of 77 in 2008. The stock has now regrouped and is pushing once again toward its breakout point.
Annual revenues are $4.8 billion. It also has licensing deals with Novartis and has been active in making acquisitions.
For 2012, analysts forecast a 29% jump in CELG's earnings to $4.41 a share from $3.43 a year ago. The stock sells with a price-earnings ratio of 17. We see that as low making the stock a good value-growth play.
Net for the upcoming first quarter should soar 45% to $1.03 a share from 71 cents a year ago. The highest estimate on the Street is at $1.12 a share.
We see chances for an upside surprise. In the prior quarter, CELG topped the consensus estimate by 2 cents a share and the quarter before that by 11 cents a share.
Looking out to 2013, Wall Street projects an 18% gain in net to $5.18 a share from the anticipated $4.41 this year.
The accumulatio /distribution line is in an uptrend and is showing strong buying. That bodes well for a breakout to a new all-time high.
Buying can be done on the stock's move over $75.10. From there, we are targeting CELG for a move to $90. A protective stop can be placed near $71.
Insider activity is bullish. Insiders have been selective buyers of the stock in recent months. Their latest buys have come around $61.
Institutional sponsorship is excellent. A key fund buyer recently was 4-star rated Fidelity Contrafund which purchased 528,200 shares. Also, 4-star rated Harbor Capital Appreciation Fund was a recent buyer of 162,946 shares.
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Bill Stiritz has experienced an estimated $145 million in paper losses on his investment in the company.
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