With Revlimid accounting for just under 70 percent of Celgene (NASDAQ:CELG) sales, anything that causes sales to drop will result in a significant impact on the company, like slowing sales revealed in the last quarter.
Morgan Joseph says, "Following the company's 4Q10 earnings and conference call, we are more cautious about prospects for Celgene. While we like Revlimid's current growth and CELG's improving pipeline, we believe the key reason Celgene has been able to sustain a very good multiple on the stock is because of strong growth from Revlimid. Revlimid accounts for around 68% of sales and its contribution is expected to rise slightly over the next two years. While Revlimid sales grew at 44% in 2010, they have decelerated slightly since 2Q10, and based on current growth patterns (which are also consistent with management's current guidance), we now think sales will likely continue to decelerate into the end of 2011. By the end of 2011, we expect Revlimid growth to drop to the teens."
Morgan Joseph downgraded Celgene (CELG) from Buy to Hold. Celgene closed Friday at $51.18, falling $3.67, or 6.69 percent.
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