Stock Pick: Celgene Corporation (CELG)


Celgene Corporation (CELG) is a global biotechnology company that engages in the discovery, development, and commercialization of drugs and therapies for the treatment of cancer and inflammatory diseases. The company’s portfolio of medications include Revlimid, Vidaza, Thalomid, Abraxane, and Isodax. As of May 2019, the drugmaker employs 8,852 people and has generated $15.3 billion in sales.

Technical Analysis of Celgene Corporation (CELG)

Celgene is a stock that’s looking to end its 23-month long downtrend.

After registering an all-time high of $147.17, the security succumbed to heavy profit-taking. The selling pressure was so strong that the stock plunged to $58.59. At that point, CELG lost more than 60% of its value from the peak.

The good news is that bulls started to take control of the stock after the sharp decline. We are now seeing CELG print a reversal pattern that can end the downtrend.

Technical analysis shows that CELG is painting a large inverse head-and-shoulders pattern that’s visible in both the weekly and monthly charts. The neckline of the pattern is $97. While the equity is trading above that level, the move does not look convincing because of the lack of volume.

Thus, it is very likely that the Celgene Corporation stock has one more leg down before it convincingly takes out $97. We’ll long the stock at the retest of $97 as support.

Fundamental Analysis of Celgene Corporation (CELG)

On top of our technical analysis, fundamental analysis also supports our bullish view.

A look at the income statement of the biotech firm reveals tremendous growth in the last four years. Celgene generated a top line of $7.6 billion in 2014. By the end of 2018, revenues soared to $15.3 billion. That a massive growth of over 100% in 4 years.

Additionally, the company has beaten consensus estimate for the first two quarters of 2019. In Q1, Celgene generated revenues of $4.025 billion versus expert projections of $4.01 billion. In Q2, the company performed even better as it printed revenues of $4.4 billion as opposed to consensus estimate of $4.2 billion.

Also, Celgene is set to merge with Bristol-Myers Squibb Company (BMY) around the beginning of 2020. Bristol-Myers Squibb is shelling out $74 billion to buy the cancer drugmaker. Currently, CELG has a market cap of $69 billion. Thus, there’s some room for growth before the merger takes place.

The strategy is to buy as soon as the stock stabilizes at support of $97. The targets are $116 and $135.

Weekly CELG Chart

Celgene Corporation weekly stock chart
Weekly Celgene Corporation stock chart

Monthly CELG Chart

Celgene Corporation monthly chart
As of this writing, the Celgence Corporation (CELG) stock is trading at $97.49.

Summary of Strategy

Buy: As soon as the stock stabilizes at $97.
Targets: $116 and $135.
Stop: $93

Disclaimer: The writer does not own shares of Celgene Corporation (CELG).
Featured image courtesy of Shutterstock.

Kiril is a CFA Charterholder and financial professional with 5+ years of experience in financial writing, analysis and product ownership. He has passed all three CFA exams on first attempt and has a bachelor's degree with a specialty in finance. Kiril’s current focus is on cryptocurrencies and funds, as he does his own crypto research and is a Product Manager at Mitre Media. He also has his personal website, where he teaches people about the basics of investing. His ultimate goal is to help people with limited knowledge of finance and investments to create investment portfolios easily, and in line with their unique circumstances.