Celgene
Celgene… will generate more than 60% of its revenue this year from a single medicine called Revlimid, used primarily to treat a type of cancer called multiple myeloma. But Revlimid is gaining regulatory approval for an expanding number of uses. It has plenty of growth potential overseas, and shows promise in combination therapies. And it has more than a decade of remaining patent protection. Analysts predict double-digit yearly revenue growth for Revlimid through the end of the decade.
By then, Celgene is expected to have four drugs with yearly sales in the billions of dollars, versus just Revlimid today. And a robust pipeline of medicines in development provides ample opportunity for new successes. Management has set a goal of $21 billion in yearly revenue by 2020, up from a projected $9.2 billion this year. If it’s successful, two things are likely to happen. First, Revlimid’s contribution is likely to drop below half of revenue by then. Second, earnings per share could more than double, as Celgene’s growing size offers better leverage on its research and marketing expenses. Shares sell for 22 times this year’s earnings consensus—inexpensive considering the growth outlook. Bristol-Myers Squibb is expected to increase earnings at a similar pace, and it goes for over 35 times earnings. Eli Lilly (LLY), a slower grower, goes for 25 times.
http://www.barrons.com/articles/barrons-top-10-stock-picks-f…