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What Are Celgene’s Margin Projections for Fiscal 2018?

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Margin guidance for fiscal 2018

In its third-quarter earnings conference call, Celgene (CELG) revised its GAAP (generally accepted accounting principles) operating margin guidance for fiscal 2018 from 35% to 34%. The company also revised its fiscal 2018 adjusted operating margin guidance from 56% to 55.5%. The company expects the adjusted tax rate to be 17% in fiscal 2018. Based on these assumptions, Celgene has updated its GAAP diluted EPS guidance from the previously projected range of $5.95–$6.25 to $5.25–$5.75 for fiscal 2018.

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In the third quarter, Celgene reported a product gross margin of 96.2%, which is a YoY decline of 40 basis points. The company also reported an operating margin of 55.3%, a YoY decline of 420 basis points. The company reported an effective tax rate of 16.7% in the third quarter, a YoY rise of 20 basis points.

Margin projections

Wall Street analysts expect Celgene to report a gross margin 96.39% in fiscal 2018, which would be a YoY decline of 28 basis points. The company is also expected to report a gross margin of 96.28% in fiscal 2019, which is a YoY decline of 11 basis points. Wall Street analysts have predicted Celgene’s fiscal 2020 gross margin to be 96.66%, which would be a YoY improvement of 38 basis points.

Analysts expect Celgene to report an adjusted net profit margin of 42.64% in fiscal 2018, which would be a YoY decline of 363 basis points. The company is also expected to report an adjusted net profit margin of 44.08% in fiscal 2019, a YoY improvement of 144 basis points. Wall Street analysts have also forecasted Celgene’s fiscal 2020 adjusted net profit margin to be 45.97%, which would be a YoY improvement of 189 basis points.

In the next article, we’ll discuss growth trends for Otezla for fiscal 2018.

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