As news emerges of Amazon considering a big push into pharmaceuticals, CNBC's Jim Cramer endorsed one of his favorite drugmakers, Celgene, after its stock fell off a cliff on Thursday.
"We like to buy low and sell high. It's literally the oldest rule in the game," the "Mad Money" host said as investors' flight from the stock subsided on Friday. "So I consider it my job to point out when we're getting a nice buying opportunity in the stock of a high-quality company if they ever occur."
Cramer said the market should view the pullback as "a gift" because every time Celgene shares have sold off, they've managed to rebound.
The main driver for Celgene's drop was Morgan Stanley's downgrade of the stock to an "underperform" rating. Analysts' chief concerns were competition from generic versions of Celgene's flagship drugs and the biopharmaceutical player's 2018 pipeline.
But Cramer said Morgan Stanley blew its worries out of proportion. Celgene's patents likely won't be challenged by its rivals anytime soon — its three main patents expire in the 2020s, by which point the company will have made a considerable amount of money on the drugs.
And according to Celgene, its pipeline stands to generate up to $14 billion in peak sales. Moreover, successful clinical trials could send the stock surging once again, Cramer said.
"When a high-quality stock like Celgene gets slammed but the underlying thesis is still intact, I think you need to do some buying," Cramer concluded. "Celgene's building a stable of multi-billion-dollar drugs, it's got fabulous management, and [blood cancer treatment] Revlimid's patent protection will likely hold up, so don't let this Morgan Stanley analyst scare you out of a good story, especially when that analyst sat out the whole run with a hold on the stock, which is not what I'd call value-added."