What Should We Expect From Vertex Pharmaceuticals Incorporated’s (NASDAQ:VRTX) Earnings Over The Next Few Years?
Vertex Pharmaceuticals Incorporated’s (NASDAQ:VRTX) released its most recent earnings update in September 2017, which signalled that losses became smaller relative to the prrior year’s level as a result of recent tailwinds Below is a brief commentary on my key takeaways on how market analysts predict Vertex Pharmaceuticals’s earnings growth outlook over the next few years and whether the future looks brighter. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings. View our latest analysis for Vertex Pharmaceuticals
Analysts’ outlook for the upcoming year seems buoyant, with earnings moving from negative to positive. Moreover, earnings are expected to continue its upward direction, generating $782.5M in 2020, before plateauing to similar levels in 2021.
Although it is helpful to be aware of the growth rate each year relative to today’s level, it may be more valuable analyzing the rate at which the earnings are moving on average every year. The pro of this technique is that it ignores near term flucuations and accounts for the overarching direction of Vertex Pharmaceuticals’s earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I put a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 43.66%. This means that, we can anticipate Vertex Pharmaceuticals will grow its earnings by 43.66% every year for the next couple of years.
Next Steps:
For Vertex Pharmaceuticals, I’ve put together three relevant factors you should further research:
1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
2. Valuation: What is VRTX worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether VRTX is currently mispriced by the market.
3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of VRTX? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
