Celgene (CELG) Q2 Earnings: Can the Stock Pull a Surprise?
Celgene Corporation CELG is scheduled to report second-quarter 2016 results on Jul 28, before the market opens. Last quarter, the company reported a positive earnings surprise of 12.38%.
Celgene’s track record has been mixed with the company beating earnings estimates on two occasions while missing in one and posting in line results in another. Overall, the company has delivered an average positive surprise of 3.29%. Let's see how things are shaping up for the company this quarter.
Will Strong Product Sales Continue to Drive Q2 Results?
At the time of reporting first-quarter 2016 results, Celgene raised the low end of its 2016 guidance range for both earnings and revenues with the company’s products performing well. The company anticipates earnings in the range of $5.60–$5.70 per share (old guidance: $5.50–$5.70 per share). Net product sales for 2016 are expected in the range of $10.75–$11.0 billion (old guidance: $10.5–$11.0 billion).
Key drug, Revlimid, should continue to remain the main growth driver in the second quarter as well. Increases in duration of use and market share gains in the U.S., and ongoing global launches in the newly diagnosed multiple myeloma indication should continue to be an important driver of growth and help the drug contribute significantly to the top line. Reimbursement across EU and Japan should further support revenues. For 2016, Revlimid sales are anticipated to be approximately $6.7 billion, at the high end of the previous guidance of $6.6–$6.7 billion.
Meanwhile, Celgene continues to expect Pomalyst/Imnovid and Otezla to generate sales greater than $1 billion in 2016. Pomalyst/Imnovid growth should continue to be strong in 2016 on the back of the first full year of product sales in Japan and increase in duration of treatment along with market share gains across the world. On the first-quarter call, the company noted that Pomalyst/Imnovid holds a strong global position in relapsed refractory myeloma.
Commercialization of Otezla, on the other hand, continues to be encouraging with physician and consumer campaigns driving increases in brand awareness and patient requests for the drug, particularly in the U.S. On the first-quarter call, the company mentioned that Otezla continues to lead all other therapies in new-to-brand share, with approximately 40% of both the psoriasis and psoriatic arthritis markets. The company is also working on expanding its footprint in the EU by gaining reimbursement for the drug.
However, the company had lowered Abraxane's outlook for 2016. Abraxane sales are expected in the range of $950 million to $1 billion (previous guidance: greater than $1 billion) due to a highly competitive U.S. market for lung and breast cancer therapy.
Meanwhile, Celgene’s share buyback program should boost the bottom line.
On the second-quarter call, investor focus is expected to remain on the company’s performance and label expansion efforts along with pipeline updates.
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 for Celgene is 0.00% since the Most Accurate estimate stands in line with the Zacks Consensus Estimate of $1.25.
Zacks Rank: Celgene carries a Zacks Rank #3, which when combined with an ESP of 0.00%, makes surprise prediction difficult.
Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
CELGENE CORP Price and EPS Surprise
CELGENE CORP Price and EPS Surprise | CELGENE CORP Quote
Stocks That Warrant a Look
Here are a few health care stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter.
Amgen Inc. AMGN has an Earnings ESP of +1.10% and a Zacks Rank #3. It is scheduled to report second-quarter results on Jul 27.
United Therapeutics Corporation UTHR has an Earnings ESP of +2.51% and a Zacks Rank #3. It is scheduled to report second-quarter results on Jul 28.
Sanofi SNY has an Earnings ESP of +1.33% and a Zacks Rank #3. It is scheduled to report second-quarter results on Jul 29.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
SANOFI-AVENTIS (SNY): Free Stock Analysis Report
CELGENE CORP (CELG): Free Stock Analysis Report
AMGEN INC (AMGN): Free Stock Analysis Report
UTD THERAPEUTIC (UTHR): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
