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Vertex Pharmaceuticals (VRTX) Gains As Market Dips: What You Should Know

Zacks Equity Research

In the latest trading session, Vertex Pharmaceuticals (VRTX) closed at $274.34, marking a +1.29% move from the previous day. This change outpaced the S&P 500's 0.53% loss on the day. Elsewhere, the Dow lost 1.04%, while the tech-heavy Nasdaq added 0.67%.

Investors will be hoping for strength from VRTX as it approaches its next earnings release. On that day, VRTX is projected to report earnings of $2.13 per share, which would represent year-over-year growth of 69.05%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $1.40 billion, up 48.8% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $8.91 per share and revenue of $5.71 billion. These totals would mark changes of +67.17% and +37.08%, respectively, from last year.

It is also important to note the recent changes to analyst estimates for VRTX. These recent revisions tend to reflect the evolving nature of short-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. VRTX currently has a Zacks Rank of #1 (Strong Buy).

Looking at its valuation, VRTX is holding a Forward P/E ratio of 30.4. Its industry sports an average Forward P/E of 28.57, so we one might conclude that VRTX is trading at a premium comparatively.

Meanwhile, VRTX's PEG ratio is currently 1.07. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Medical - Biomedical and Genetics industry currently had an average PEG ratio of 1.92 as of yesterday's close.

The Medical - Biomedical and Genetics industry is part of the Medical sector. This group has a Zacks Industry Rank of 34, putting it in the top 14% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.


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