Earnings Beat: Vertex Pharmaceuticals Incorporated Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models
Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) just released its latest full-year results and things are looking bullish. Vertex Pharmaceuticals delivered a significant beat to revenue and earnings per share (EPS) expectations, with sales hitting US$4.2b, some 11% above indicated. Statutory EPS were US$4.51, an impressive 46% ahead of forecasts. Following the result, analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we gathered the latest post-earnings forecasts to see what analysts' statutory forecasts suggest is in store for next year.
See our latest analysis for Vertex Pharmaceuticals
After the latest results, the 19 analysts covering Vertex Pharmaceuticals are now predicting revenues of US$5.32b in 2020. If met, this would reflect a sizeable 28% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to shoot up 42% to US$6.52. Yet prior to the latest earnings, analysts had been forecasting revenues of US$4.81b and earnings per share (EPS) of US$5.09 in 2020. There has definitely been an improvement in perception after these results, with analysts noticeably increasing both their earnings and revenue estimates.
It will come as no surprise to learn that analysts have increased their price target for Vertex Pharmaceuticals 7.1% to US$263 on the back of these upgrades. The consensus price target just an average of individual analyst targets, so - considering that the price target changed, it would be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Vertex Pharmaceuticals, with the most bullish analyst valuing it at US$300 and the most bearish at US$202 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
In addition, we can look to Vertex Pharmaceuticals's past performance and see whether business is expected to improve, and if the company is expected to perform better than wider market. We can infer from the latest estimates that analysts are expecting a continuation of Vertex Pharmaceuticals's historical trends, as next year's forecast 28% revenue growth is roughly in line with 32% annual revenue growth over the past five years. Compare this with the wider market, which analyst estimates (in aggregate) suggest will see revenues grow 18% next year. So it's pretty clear that Vertex Pharmaceuticals is forecast to grow substantially faster than its market.
The Bottom Line
The biggest takeaway for us from these new estimates is that the consensus upgraded its earnings per share estimates, showing a clear improvement in sentiment around Vertex Pharmaceuticals's earnings potential next year. Fortunately, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider market. There was also a nice increase in the price target, with analysts feeling that the intrinsic value of the business is improving.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Vertex Pharmaceuticals going out to 2024, and you can see them free on our platform here..
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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