Celgene Rises on Yet Another Stock Split - Analyst Blog

Shares of Celgene Corporation CELG climbed 4.49% to close the trading session on Jun 19 at $168.31 per share following the approval of a two-for-one stock split at the annual meeting of its shareholders on Jun 18, 2014.  

The stock-split will double the number of authorized shares to 1,150 million. The number of outstanding shares will double from 399 million as of Jun 17. Celgene stated in its press release that as a result of the stock split its shareholders, as of Jun 18 will get an additional share for each share he/she currently holds. The shares will be distributed on Jun 25 with the adjusted stock price being reflected the following day.

The share price of the biopharmaceutical major would be reduced to half the previous value due to the two-for-one stock split. However, the value of the company will remain unaltered.

Celgene noted that this is its fourth stock split ever since it went public. Previous stock splits happened in 2000 (three-for-one), 2004 (two-for-one) and 2006 (two-for-one).

We note that Celgene has a strong portfolio with drugs like Revlimid, Abraxane, Pomalyst and the newly approved Otezla in its kitty. Otezla was approved by the FDA for the active psoriatic arthritis indication in March this year. Celgene is seeking FDA approval for the moderate-to-severe psoriasis indication (U.S. target date: Sep 23, 2014).
 
In addition, Celgene is seeking EU approval for Otezla in the combined psoriasis and psoriatic arthritis indication, with an opinion from the European Medicines Agency's Committee for Medicinal Products for Human Use expected by Dec 31, 2014. The pipeline at Celgene is also attractive. Given the strong fundamentals, the stock split is likely to attract more investors to Celgene (long-term growth rate of 25.3%), as it makes the shares more affordable and boosts shareholder confidence.

Celgene carries a Zacks Rank #3 (Hold). Better-ranked stocks in the healthcare sector include Regeneron Pharmaceuticals REGN, Gilead Sciences GILD and Allergan AGN. All the three stocks sport a Zacks Rank #1 (Strong Buy).

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