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

Zacks Equity Research
·3 mins read

Vertex Pharmaceuticals (VRTX) closed at $276.09 in the latest trading session, marking a +0.54% move from the prior day. This change outpaced the S&P 500's 0.63% loss on the day. Elsewhere, the Dow lost 0.55%, while the tech-heavy Nasdaq lost 0.1%.

Prior to today's trading, shares of the drugmaker had gained 3.7% over the past month. This has lagged the Medical sector's gain of 3.79% and the S&P 500's gain of 5.91% in that time.

Wall Street will be looking for positivity from VRTX as it approaches its next earnings report date. On that day, VRTX is projected to report earnings of $2.29 per share, which would represent year-over-year growth of 86.18%. Meanwhile, our latest consensus estimate is calling for revenue of $1.46 billion, up 53.77% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $9.75 per share and revenue of $5.98 billion. These totals would mark changes of +82.93% and +43.55%, respectively, from last year.

Investors should also note any recent changes to analyst estimates for VRTX. These revisions help to show the ever-changing nature of near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

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 ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 0.53% higher. VRTX is currently a Zacks Rank #2 (Buy).

In terms of valuation, VRTX is currently trading at a Forward P/E ratio of 28.15. This valuation marks a premium compared to its industry's average Forward P/E of 27.15.

Investors should also note that VRTX has a PEG ratio of 1.35 right now. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. VRTX's industry had an average PEG ratio of 1.7 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 170, putting it in the bottom 33% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. 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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