Morgan Stanley Looks Over Celgene's Quarter

In a report published Friday, Morgan Stanley analysts maintained an Equal-Weight rating on Celgene Corporation CELG, while raising the price target from $109 to $110, after the company's quarterly results reflected in-line Revlimid and weakness across the rest of the portfolio.

The company announced quarterly revenue of $2.08B, short of expectations. However, the EPS was higher, at $0.01, with the beat being driven by

Revlimid (+$10M) sales were roughly in-line with consensus, while Abraxane (-$19M), Pomalyst/Imnovid (-$13M), and Otezla (-$12M) missed expectations.

Celgene reiterated its total revenue guidance for 2015 at $9.00-$9.50B, while projecting non-GAAP EPS at $4.60-$4.75, Revlimid sales of $5.60-$5.70B, Abraxanesales of $1-$1.25B, and operating margins at ~52 percent.

In the report Morgan Stanley noted "tidbits from the call":

1. -$22M of the-$27M top-line f/x headwind was from Revlimid. The q/q f/x impact on Revlimid was -$10M
2. The unhedged to-pline f/x impact was -5.8 percent
3. The company said Revlimid sales may reach or exceed the upper end of the guidance range ($5.6-$5.7B)
4. Mgt. projected incremental contributions from Russia and Mexico
5. R&D is expected to increase through the year on account of "increasing collaboration and clinical costs"
6. 85 percent of the $7.3B cash balance is ex-US
7. Mgt. expects Abraxane sales to meet the lower end of range ($1-$1.25B)
8. Mgt. indicated that Revlimid in "newly diagnosed MM had similar trends in Germany to what it saw in the early US launch."
9. Early data indicate "Otezla persistence is similar to psoriasis analogues in the space"
10. Otezla has received incremental share by "patients transitioning more quickly from methotrexate - a positive sign
11. On GED-0301, Mgt. highlighted the presentations at DDW with a sub-analysis on patient reported outcomes and response by baseline level of disease activity