Celgene Corporation (NASDAQ:CELG) — CELG stock has been a top choice for money managers seeking high-quality biotech companies with outstanding management, robust growth prospects, and a P/E ratio that is still reasonably modest.
In late January, S&P Capital IQ raised its 12-month target price on CELG stock by $14 to $146, noting that Q4 revenue rose 19% thanks in part to double-digit sales growth from two key drugs, Revlimid and Abraxane. Its analysts expect sales of these drugs to grow 15% to 30% in 2015.
They estimate total revenue will rise 21.5% this year, aided by the fact that the company has sole ownership of most of its key marketed drugs. 2015 earnings are expected to nearly double to $4.75 per share, helped by a below-average tax rate of 17%. Finally, its analysts see gross margins near 95% this year, which they note is among the best in the industry.
The biotech sector has been one of the strongest groups for the past two years, gaining 134% compared with a 34% advance in the broader market. And CELG stock has been at the forefront of this trend. Shares surged 87% since their 52-week low under $67 in April, hitting a new all-time high of $125.58 on Thursday.
CELG stock rallied on higher-than-normal volume Thursday as it approached a triple-top high at $125.45 while flashing a MACD buy signal. Ongoing momentum is strong, and investors’ focus on biotech should help shares break to new highs.
Buy CELG stock at the market with a stop-loss at $112 and a trading target of $145 for a potential 15%-plus return.
