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More Upside on this Biotechnology Giant: Celgene Corporation (CELG)

The primary contradictions of Pomalyst revolve around pregnant women, and therefore it will carry a boxed warning for such patients. Pomalyst belongs to the same family as Celgene’s Revlimid, but is successful with patients who have stopped responding to Revlimid. According to the company CEO, the drug has a peak sale potential of $1 billion.


The stock is currently trading at a P/E of 14x, which is below the industry average of 25x and market average of 19x. The stock is also trading at a 9% discount to its mean sell side target price of $109. As the table below shows, if we use a P/E of 20x and average EPS, the following price targets can be calculated. If valued on a P/E of 20x, the stock is trading at a 13% discount to its 2013 valuations and at a 36% discount to its 2014 valuations.

2013 2014
EPS est $5.66 $6.82
Target Price $113 $136
Discount 13% 36%

According to sell side estimates, the newly approved drug has the potential to generate approximately $500 million in sales by the end of 2015. The strong pipeline and current dominance of Revlimid over alternatives by J&J and Onyx makes me bullish on Celgene as a long term investment.

The article More Upside on this Biotechnology Giant originally appeared on and is written by Mohsin Saeed.

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