(By Balaseshan) UBS Securities analyst Matthew Roden downgraded rating of Celgene Corp. (NASDAQ:CELG) to "Neutral" from "Buy", while increasing price target to $80 from $78 on lower apremilast risk.
Roden said CELG shares are up 27% since Revlimid was not approved in the European Union (S&P: up 8%), at which time he argued upcoming apremilast data represented a catalyst for re-rating.
That having played out, the analyst sees the risk-reward as more balanced at current levels, and views CELG as a stock he has rather add on pullbacks, such as those created from the second cancer controversy or the Revlimid European Union non-approval.
Based on multiple myeloma expert discussions, the analyst struggles to find meaningful upside to Street Revlimid growth forecasts. He has been positive on apremilast and add it to his model, although the benefit is partially offset by increased Revlimid competition from Kyprolis in relapsed myeloma.
Roden sees upside to Street EPS but still see top line growth as key to CELG shares. He is positive on Celgene big picture, and would get more positive if the visibility into the pipeline improves such that meaningful sales diversification away from Revlimid.
The analyst sees the risk-reward as more balanced in front of potential phase 3 data from the MM-020 trial (which he likes but sees high expectations), and further phase 3 abraxane and apremilast data. Also looming is clarification of the patent term for Revlimid, which he is positive on, although uncertainty has been an overhang on CELG.
CELG is trading down 2.57% at $73.50 on Monday.