Celgene (CELG) To Post Q1 Earnings: What's In The Cards?
Zacks Investment Research | Apr 24, 2017 03:17AM ET
Celgene Corporation (NASDAQ:CELG) is scheduled to report first-quarter 2017 results on Apr 27, before the opening bell. Last quarter, the company reported a negative earnings surprise of 1.40%.
Celgene outperformed the Zacks classified Medical-Biomedical and Genetics industry in the past one year. The stock gained 10.5% during this period, compared with a decline of 14.4% for the industry.
Celgene’s track record has been pretty decent with the company beating earnings estimates thrice in the trailing four quarters. Overall, the company has delivered an average positive surprise of 5.08%.
Let's see how things are shaping up at the company ahead of this announcement.
Factors at Play
Celgene’s key product, Revlimid, should continue to act as the main growth driver in the first quarter, driven by share gains in important markets and longer treatment duration in newly diagnosed multiple myeloma (MM). Other key products – Pomalyst/Imnovid, Abraxane and Otezla continue to perform well. Both Otezla and Pomalyst achieved blockbuster status in 2016, recording over $1 billion in sales.
Sales of Revlimid are expected to maintain momentum along with Otezla and Pomalyst. Securing reimbursement in additional countries, particularly in Japan, should boost the drug’s sales in international markets. Label expansion of these drugs will aid the top line.
Celgene is working on expanding Revlimid’s label further. Revlimid received FDA approval for use as a maintenance treatment in NDMM patients after they receive an autologous stem-cell transplant. The drug was also approved in the EU for the same.
Currently, a broad phase III program evaluating Revlimid in non-Hodgkin lymphoma (NHL) is underway.
Abraxane should maintain its position in the U.S. with stable market shares in breast, lung and pancreatic cancers. However, Abraxane sales are under pressure due to a highly competitive U.S. market for lung and breast cancer therapy.
The company did not provide any quarterly guidance but the annual guidance for 2017 was encouraging. For 2017, Celgene expects earnings around $7.10 to $7.25 per share. Net product sales are expected around $13.0–$13.4 billion. Revlimid sales are projected between $8 billion–$8.3 billion. Abraxane sales are still estimated to be around $1 billion.
On the first-quarter call, investors are expected to gain more visibility on the company’s performance and label expansion efforts, along with updates on the pipeline front.
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Earnings Whispers
Our proven model does not conclusively show that Celgene is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here, as elaborated below.
Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is pegged at -0.68%. This is because the Most Accurate estimate is currently $1.46 while the Zacks Consensus Estimate is $1.47. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter .
Zacks Rank: Although Celgene’s Zacks Rank #3 increases the predictive power of ESP, its negative ESP makes it highly unlikely for the stock to beat earnings this quarter.
As it is, we caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks That Warrant a Look
Here are some health care stocks that you may want to consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter.
Amgen Inc. (NASDAQ:AMGN) has an Earnings ESP of +2.33% and a Zacks Rank #3. The company is scheduled to release results on Apr 26. You can see the complete list of today’s Zacks #1 Rank stocks here.
Gilead Sciences, Inc. (NASDAQ:GILD) has an Earnings ESP of +2.77% and a Zacks Rank #3. The company is scheduled to release results on May 2.
Intercept Pharmaceuticals, Inc. (NASDAQ:ICPT) has an Earnings ESP of +9.13% and a Zacks Rank #3. The company is expected to release results on May 4.
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