Wednesday August 24, 2011
by John McCamant, editor The Medical Technology Stock LetterCelgene (
CELG) has authorized the repurchase of up to an additional $2 billion of the company’s common stock; 5his comes on top of the estimated $550 million share repurchase made in recent weeks.
We like the decision as it reflects management confidence in generating sufficient cash flow from operations.
Most importantly, it is a reflection that CELG believes that their stock is undervalued and is willing to put their hard earned cash back into the company.
“The expansion of the share repurchase program reflects our confidence in the operational and financial long-term growth of the Company and our commitment to increase shareholder value,” said Bob Hugin, Chairman and CEO of CELG.
“We intend to manage our balance sheet dynamically in order to return cash to shareholders and to take advantage of strategic growth opportunities to expand our business.”
This is a large amount of money and it probably means that we will not see a significant acquisition by CELG this year. That said, we still expect the company to be opportunistic and pounce on any attractive licensing situations that arise.
Buying your own stock in difficult markets sends a strong message to both the markets and your shareholders that CELG seriously believes that their stock is undervalued.
Repurchases during a difficult market also maximize the return of capital to shareholders. CELG is a buy under $60.
Learn more about this financial newsletter at John McCamant's The Medical Technology Stock Letter.
