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Trade of the Day: Celgene Corporation (CELG) Looking Healthy Again

S&P sees CELG's growth prospects as excellent despite industry headwinds


Celgene Corporation (NASDAQ:CELG) — This biotechnology company develops and markets small-molecule drugs for the treatment of cancers and inflammatory diseases. It granted a license to one of the company’s primary drugs, Revlimid, to Natco to begin selling the drug generically in March 2022 with volume restrictions until 2025.

It acquired Receptos in August, whose main drug is in Phase III trials to treat multiple sclerosis; others are in Phase II trials for ulcerative colitis and in Phase I for Crohn’s disease.

RCPT’s primary drug for multiple sclerosis could reach peak sales of $4 billion-$6 billion annually.

Standard & Poor’s believes that the growth prospects for CELG continue to be excellent, and that the shares are undervalued. They reiterated their 5-star-strong-buy opinion in late-July, again emphasizing that patent settlements and various acquisitions encouraged them to increase their earnings estimate to $5.72, up from $5.65 this year.

They kept their EPS estimate at $7.34 for 2017. Their target price from a fundamental basis is $160.

I last reviewed this leading biotech stock on July 8, concluding, “A break through the bearish resistance line at $105 on high volume could lead to a quick break of the 200-day moving average above $107. Thus there are enough positive signals to buy CELG stock at a break above $105 for a trade to $120. If successful, this would result in a gain of more than 14%.”

The breakout occurred on July 21, but the drive higher ended at $118 when the industry came under fire in an “over-pricing” scandal. The stock fell under $105 last week, where my CBR (internal indicator) flashed a fresh buy signal.

Accumulation has been high, yesterday MACD issued a new buy signal and the stock has confirmed that it is in a bull market. Thus, purchase CELG at $107 with a target of $122 for a possible gain of 14%.

CELG Buy 107 T 122
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Trade of the Day: Celgene Corporation (CELG) Looking Healthy Again

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