Celgene (CELG) — Today begins my coverage of the best undervalued buys in the market, and this biotech is on the list because of its outstanding management and product development. The company develops small-molecule drugs for the treatment of blood-borne and solid-tumor cancers and inflammatory diseases.
S&P Capital IQ rates the shares a “strong buy” with a target of $104. It estimates operating EPS will increase to $3.64 in 2014, up from $1.69 in 2013, and to $4.84 in 2015.
The stock has been on the Trade of the Day buy list for more than two years. I last recommended it on Sept. 17, at $ $92.80, and it jumped to a high of $96.50 on Sept. 25, before pulling back.
I reiterate my “buy” on CELG. Traders should place a buy order near its 200-day moving average at $82.50 since the overall market is now under pressure.
Investors should “stage in” purchases due to the stock’s volatility. Take a one-third position now, one-third at $82.50 to $83, and if CELG declines below $83, add the final third.
My trading target is $92, but my 12-month target is at least $105, more than 20% above current prices.
