US–based pharmaceutical company Celgene Corporation (NASDAQ: CELG) will report its fourth quarter earnings on January 27, 2011. In the last three quarters of FY 2010, Celgene Corporation's reported EPS exceeded analysts' consensus estimates by margins in the range of 4.50 percent and 5.60 percent.
Celgene Corporation, along with its subsidiaries, is a global integrated biopharmaceutical company primarily engaged in the discovery, development and commercialization of innovative therapies designed to treat cancer and immune-inflammatory related diseases. The company's commercial stage products include REVLIMID, THALOMID (inclusive of Thalidomide Celgene and Thalidomide Pharmion, subsequent to the acquisition of Pharmion Corporation, or Pharmion), VIDAZA and FOCALIN. FOCALIN is sold exclusively to Novartis Pharma AG.
Q3 Earnings Beat Wall Street Analysts' Consensus
For the third quarter, Celgene reported total revenues of $910 million, up 31 percent from $695 million reported for the third quarter FY 2009. The increase in total revenue was driven by global market share gains and increased duration of therapy of REVLIMID(R) and VIDAZA(R). Net sales of REVLIMID were $641.3 million, an increase of 43 percent over the same period in 2009. VIDAZA(R) net sales were $141.4 million, an increase of 37 percent from 2009. For the third quarter FY 2010, the company reported net income of $349.9 million, or $0.75 per diluted share, compared to net income of $259.8 million, or $0.56 per diluted share in the same period of FY 2009.
On October 15, 2010, Celgene has completed the acquisition of Abraxis BioScience, Inc. For each share of Abraxis common stock, shareholders received $58 in cash, 0.2617 shares of Celgene common stock, and one tradable contingent value right, which entitles its holder to receive a pro-rata share of potential payments for future regulatory milestones and commercial royalties. The transaction adds ABRAXANE for Injectable Suspension (paclitaxel protein-bound particles for injectable suspension) (albumin-bound) to the company's existing portfolio of leading cancer products and offers another significant scientific platform that may drive future development.
In the Biotechnology industry, Celgene competes with Amgen Inc. (NASDAQ: AMGN), AstraZeneca Plc. (NYSE: AZN), and Bristol-Myers Squibb Co. (NYSE:BMY). In the last one year, Amgen reported earnings of $4.63 per share, on revenues of $15.02 billion. AstraZeneca reported earnings of 5.50 per share, on revenues of $33.60 billion. BMY reported earnings of $5.92 per share, on revenues of $19.41 billion. On the other hand, Celgene reported earnings of $1.98, on revenues of $3.32 billion.
Celgene Corporation has P/E ratio of 28.30, higher than the industry's average P/E of 20.91. The P/S ratio of the company is lower at 8.04, compared to the industry's P/S of 8.42. The quarterly revenue growth of the whole industry is 19.80 percent, compared to the company's quarterly revenue growth of 30.90. The company's price earnings ratio to growth is at 0.87 years, which is very good for investors.
Celgene's Fourth Quarter and FY 2011 Projections
Celgene reported its fourth quarter unaudited results on January 10, 2010. The company expects the fourth quarter FY 2010, total revenues to be $1.05 billion, and projected diluted earnings per common share to be approximately $0.73 per share. For full FY 2010, the company expects total revenues to be approximately $3.60 billion, with projected earnings per diluted share of $2.80.
For FY 2011, Celgene expects total revenues in the range of $4.4 billion to $4.5 billion, with earnings per diluted share in the range of $3.30 to $3.35.
Wall Street To See Celgene Miss Consensus Estimates
For the fourth quarter ending December 31, 2010, analysts' EPS estimates range from a low of $0.71 to a high of $0.79 per share, compared to the consensus estimate of $0.74 or $0.62 earned in the year ago quarter. Analysts' revenue estimates for the fourth quarter range from a low of $955.7 million to a high of $1.10 billion, compared to a consensus estimate of $1.04 billion or $757.75 million reported in the same quarter a year ago. For the quarter ended December 31, 2010, the consensus EPS forecast has remained downgraded to the current estimate of $0.74 per share, from $0.75 per share estimated 60 days ago.
In April 2009, the board of directors approved a $500 million common share repurchase program. As of December 31, 2009, an aggregate 4,314,625 common shares were repurchased under the program at an average price of $48.55 per common share and total cost of $209.5 million. On January 10, 2011, Celgene's board of directors authorized the repurchase of up to an additional $500 million of the company's common stock. In the last 52 weeks, Celgene's stock has been trading in the range of $48.02 and $65.79. In the last one year, Celgene's stock has lost 4.3 percent in value to settle at $56.03 on January 21, 2011. Based on the EPS estimates and Celgene's FY 2011 guidance, I see a one year target price of $68.