Credit Suisse Calls Celgene The Best In Class Near- And Long-Term Growth Story

• Celgene Corporation CELG shares were volatile in 2015 and are down 14 percent since January 4.
• Credit Suisse’s Alethia Young initiated coverage of the company with an Outperform rating and a price target of $149.
• Celgene’s shares look cheap relative to the company’s growth, Young stated.

Analyst Alethia Young mentioned that Celgene has the right partnerships and assets to diversify and transform its business in the long term. The analyst believes that the biggest overhang to the Celgene story is now over and the stock looks cheap relative to the company’s growth potential.

Celgene’s shares currently trade at a discount to growth peers. “We think this is because Celgene is less diversified than Pharma peers. As we get data, we think this view will change and see Celgene re-rating to a multiple that reflects growth,” Young wrote.

Celgene’s current stock valuation does reflect some amount of growth in the company’s base business, Young noted, while adding that growth in the company’s BASE business is underappreciated. He sees “significant upside potential to label expansion and growth from Abraxane, Revlimid and Otezla.”

Celgene is expected to record revenue and EPS CAGRs of 17 percent and 22 percent over the 2016-2020 period. “Our top-line growth estimates are higher than the consensus by 2% due to greater confidence in hematology & Otezla,” the Credit Suisse report stated.