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Is a Beat in the Cards for Celgene's (CELG) Q2 Earnings?

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Celgene Corporation (CELG - Free Report) is expected to have significantly benefited from key drug Revlimid's performance, which is expected to reflect in the upcoming quarterly results.

The company surpassed earnings estimates in the trailing four quarters. In the last reported quarter, it delivered a positive earnings surprise of 2.41%.

Celgene Corporation Price, Consensus and EPS Surprise

Celgene Corporation Price, Consensus and EPS Surprise

Celgene Corporation price-consensus-eps-surprise-chart | Celgene Corporation Quote


Let's see how things are shaping up ahead of this announcement.

Earnings Whispers

Our proven model indicates that Celgene is likely to beat earnings estimates this quarter. This is because it has the right combination of two key ingredients — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold).

Earnings ESP: The company’s Earnings ESP is +6.28%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Celgene has a Zacks Rank #3 (Hold), which when combined with a positive ESP makes us confident of an earnings beat. 

Note that we caution against the stocks with a Zacks Rank #4 or 5 (Strong Sell) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Factors at Play

For 2019, Celgene expects revenues to be $17.0-$17.2 billion. Revlimid sales are projected to be $10.8 billion and Abraxane sales $1.1 billion. Pomalyst’s revenues are expected to be $2.4 billion, whereas Otezla sales are projected to be $1.9 billion.

Celgene’s key product, Revlimid, is likely to be the main growth driver in the second quarter. Revlimid, an oral, immunomodulatory drug, is currently approved for several indications, including the newly diagnosed multiple myeloma ("MM"), myelodysplastic syndromes ("MDS") and mantle cell lymphoma ("MCL").

Share gains in key markets and longer treatment duration are contributing to the drug’s growth. Continued uptake in front-line, non-stem, cell eligible and post-stem cell transplant maintenance segments should further propel sales of the drug in the second quarter.

Meanwhile, in May 2019, the European Commission (EC) approved Revlimid in combination with Velcade and dexamethasone (RVd) for the treatment of adult patients with previously untreated multiple myeloma, who are not eligible for transplant. Also, the FDA approved the drug (lenalidomide) in combination with a rituximab product for the treatment of adult patients with previously treated follicular lymphoma (FL) or marginal zone lymphoma (MZL). The label expansion of the drug will further boost sales in the second quarter.

Apart from Revlimid, Pomalyst, Otezla and Abraxane are expected to contribute to the top line. Psoriasis drug, Otezla, missed the consensus mark in the first quarter but we expect it to perform impressively in the second quarter.

Apart from the regular top and bottom-line numbers, investors will also focus on pipeline updates from the company. The FDA has accepted for review the new drug application (NDA) for ozanimod to treat patients with relapsing forms of multiple sclerosis (RMS) in the United States. The European Medicines Agency (EMA) also accepted for review the Marketing Authorization Application for ozanimod for the treatment of adults with relapsing-remitting multiple sclerosis in the European Union.

The FDA also accepted its Biologics License Application (BLA) for investigational erythroid maturation agent, luspatercept. The candidate is being developed in collaboration with Acceleron Pharma Inc. Luspatercept is being developed for the treatment of adult patients with very low to intermediate-risk myelodysplastic syndromes (MDS)-associated anemia, who have ring sideroblasts and require red blood cell (RBC) transfusions, and those with beta-thalassemia-associated anemia, who require RBC transfusions. The FDA has granted Priority Review to the BLA for the treatment of beta-thalassemia.

Key Anticipated Updates

Celgene has been in news since the beginning of 2019, owing to the announcement of a merger agreement with large-cap pharma company, Bristol-Myers Squibb Company (BMY - Free Report) . The transaction was earlier anticipated to close in the third quarter of 2019 but might be delayed now, given certain regulatory conditions. We expect an update on the same during the earnings call.

Share Price Performance

Celgene’s stock has gained 39.5% in the year so far,  while the performance of the industry remained flat.


Other Stocks to Consider

Here are some other stocks you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this quarter.

Alexion Pharmaceuticals, Inc. (ALXN - Free Report) is scheduled to report results on Jul 24. The company has an Earnings ESP of +3.10% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Amgen, Inc. (AMGN - Free Report) is scheduled to release results on Jul 30. The company has an Earnings ESP of +1.05% and a Zacks Rank #3.

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