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Celgene Corporation (CELG - Analyst Report) is set to unveil its second quarter 2012 results on July 26, 2012 before the start of trading. The Zacks Consensus Estimate for the second quarter is $1.06 (year-over-year increase of 35.9%) on revenues of $1,338 million (year-over-year increase of 13.1%).

First Quarter Recap

Celgene’s first quarter 2012 earnings (excluding special items but including stock-based compensation expense) of $0.96 per share beat the year-ago earnings by 35%. Higher revenues drove earnings in the reported quarter. The Zacks Consensus Estimate was $1.02 per share.

Total revenue climbed 13.2% to $1.27 billion in the first quarter of 2012. Revenues were boosted by the impressive performance of Celgene’s cancer drugs Revlimid, Abraxane and Vidaza. Revenues for the quarter were, however, below the Zacks Consensus Estimate of $1.32 billion.

(Read our detailed discussion on the first quarter earnings report at: Celgene Misses, Reaffirms). 

Agreement of Estimate Revisions

Over the past thirty days, 2 of the 5 analysts covering Celgene for the second quarter of 2012 have revised their earnings estimates downwards with no upward movement. Earnings estimates for fiscal 2012 also have a downward bias, with 3 analysts slashing estimates and 1 moving in the opposite direction over the last 30 days. Fiscal 2013 earnings estimates have been trimmed by 4 analysts over the last 30 days with no upward movement.

We believe that the downward bias is attributable to the setback suffered by Celgene last month in its efforts to expand the label of its key growth driver, Revlimid. The company withdrew its marketing application in the EU where it was seeking approval for Revlimid as a front-line maintenance therapy for treating patients suffering from multiple myeloma (MM).

Celgene stated that it intends to re-submit the application in the EU only when it has more data at its disposal to provide the European Medicines Agency’s (EMA) Committee for Medicinal Products for Human Use (CHMP) with more visibility on Revlimid’s risk-reward profile for the indication.

Celgene also pushed back its plans to seek approval of Revlimid for the additional indication in the US. The company now intends to seek approval from the US Food and Drug Administration (FDA) for the new indication in 2013 instead of the earlier target of 2012, announced while releasing its first quarter 2012 results.

Magnitude of Revisions

Given the downward bias in earnings estimate revisions over the last month, earnings estimates for the second quarter, fiscal 2012 and fiscal 2013 have gone down by a penny, 4 cents and 25 cents to $1.06, $4.35 and $4.94 respectively.

Our Recommendation

We have a Neutral recommendation on Celgene. We believe that Celgene, driven by its impressive oncology portfolio, expansion efforts, strong balance sheet and robust pipeline, will perform well in the coming quarters. The stock carries a Zacks #3 Rank (Hold rating) carried by the stock in the short run.

July 26 will be a busy day on the earnings front in the pharmaceutical sector. Apart from Celgene, other big players in the sector, such as Mylan Inc. (MYL - Analyst Report) and Gilead Sciences Inc. (GILD - Analyst Report) are scheduled to report earnings on the same day.

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