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Celgene Corporation (CELG - Analyst Report) is set to report its third quarter 2013 results on Oct 24 before the market opens. Last quarter, the company posted a 7.69% positive surprise- the fifth consecutive outperformance– driven by impressive sales of Celgene’s cancer drugs Revlimid, Abraxane and Pomalyst. Let’s see how things are shaping up for this announcement.

Factors to consider this Quarter

Celgene boasts of an impressive oncology portfolio, driven by Revlimid. Revlimid sales are expected to be strong in the third quarter of 2013 as well. Pomalyst, approved earlier in the year for treating multiple myeloma patients, performed very well in the preceding quarter (the drug’s first full quarter in the market). Focus will be on whether Pomalyst sales continue to be strong in the third quarter as well.
    
We are concerned about the declining sales of another oncology drug, Thalomid, at Celgene. In the second quarter of 2013, Thalomid sales declined 13% to $66 million. We believe this decline will continue as safer and more effective drugs are available for multiple myeloma. Moreover, sales of another oncology drug Vidaza, should go down due to generic competition, hurting Celgene top line. We note that Dr. Reddy's Laboratories Ltd. (RDY - Snapshot Report) gained U.S. approval to market its generic version of the drug last month.

Earnings Whispers?

Our proven model does not conclusively show that Celgene is likely to beat earnings this quarter. That is because a stock needs to have both a positive Zacks Earnings ESP (Expected Surprise Prediction) and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here, as you will see below.

Zacks ESP: The Zacks ESP is 0.0%. This is because the both the Most Accurate estimate and the Zacks Consensus stand at $1.38 per share.

Zacks Rank #3 (Hold): Celgene carries a Zacks Rank #3. The Zacks #3 Rank when combined with a 0.0% ESP makes surprise prediction difficult.

Stocks to Consider

While an earnings beat cannot be predicted with certainty for Celgene, here are some firms you may want to consider on the basis of our model, which shows that they have the right combination of elements to post an earnings beat this quarter:

Endo Health Solutions Inc. (ENDP - Analyst Report), with Earnings ESP of +2.66% and a Zacks Rank #1 (Strong Buy).

Mylan, Inc. (MYL - Analyst Report), with Earnings ESP of +2.56% and a Zacks Rank #2 (Buy).

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