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We are maintaining our Neutral recommendation on Celgene Corporation (CELG - Analyst Report) with a target price of $100.00. The stock carries a Zacks Rank #2 (Buy) in the short run.

Why Maintained?

Celgene disclosed its third quarter 2012 results in Oct 2012. The company earned $1.14 per share on an adjusted basis during the quarter, approximately 27% higher than the year-ago earnings. Higher revenues drove earnings in the third quarter of 2012. The Zacks Consensus Estimate was $1.16 per share.

Total revenue climbed 13.6% to $1.42 billion in the third quarter of 2012. Revenues were boosted by the impressive performance of Revlimid and Vidaza. Revenues edged past the Zacks Consensus Estimate of $1.41 billion. Net product sales climbed 16% to $1.34 billion.

Earlier this month, Celgene provided encouraging guidance for 2013. Celgene expects adjusted earnings per share for 2013 in the range of $5.50-$5.60, up 12-14% over expected earnings of $4.90 in 2012. Net product sales for 2013 are expected to be approximately $6 billion, up 11.4%.

Celgene also provided an upbeat long-term forecast. The company projects net product sales of $12 billion and adjusted earnings in the range of $13.00 - $14.00 for 2017. Celgene expects to release encouraging results for the fourth quarter of 2012 on Jan 24.

Though impressed with the overall oncology portfolio at Celgene, we remain concerned about the decline in the sales of cancer drug, Thalomid. The continuing decline in Thalomid sales has the potential to hurt Celgene’s top line if other products do not perform impressively enough. We are also concerned about the loss of exclusivity of key drug Vidaza in the US. In view of these challenges, we maintain our Neutral view on the stock.

Other Stocks to Consider

While we prefer to remain on the sidelines on Celgene, other stocks in the pharma sector such as Agenus Inc. (AGEN - Snapshot Report) and Medivation, Inc. (MDVN - Analyst Report), which carry a Zacks Rank #1 (Strong Buy), are worth considering.

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