Credit Suisse: Celgene Needs To Win Back Investor Trust

Bulls have emerged in defense of Celgene Corporation CELG as the sell-off continues after unfavorable news from the U.S. Food and Drug Administration.

Both William Blair and Credit Suisse advised investors to keep buying.

The Rating

Credit Suisse analyst Alethia Young reiterated an Outperform rating on Celgene but lowered the price target from $130 to $129.

The Thesis

The FDA rejected Celgene’s New Drug Application for ozanimod in the treatment of relapsing multiple sclerosis.

“Overall, we think this update is another unexpected hiccup after a six-month period that came with many unexpected setbacks, and so we think shares may trade down 5 to 10 percent based on the additional setback and execution questions,” Young said in a Tuesday note. (See the analyst's track record here.) 

Renewed trust in Celgene management is critical to the investment thesis, Young said. 

The analyst previously modeled for 2019 ozanimod sales between $250 million and $500 million, but lowered to zero to $135 million on the news.

“We continue to think Celgene has many viable pipeline assets and a base business that is still growing meaningfully, but execution and Revlimid IP remain key risks." 

Price Action

At the time of publication, shares were trading down 7.9 percent at $88.22. 

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