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Vertex Pharmaceuticals (VRTX) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research

Vertex Pharmaceuticals (VRTX) closed at $265.82 in the latest trading session, marking a +1.85% move from the prior day. This move outpaced the S&P 500's daily gain of 1.74%. Elsewhere, the Dow gained 1.91%, while the tech-heavy Nasdaq added 1.88%.

Prior to today's trading, shares of the drugmaker had gained 0.92% over the past month. This has outpaced the Medical sector's loss of 0.19% and the S&P 500's loss of 1.86% in that time.

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 $2.29 per share, which would represent year-over-year growth of 86.18%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $1.45 billion, up 53.01% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $9.72 per share and revenue of $5.96 billion. These totals would mark changes of +82.36% and +43.17%, respectively, from last year.

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

Our research shows that these estimate changes are directly correlated with near-term stock prices. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

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 remained stagnant. VRTX is holding a Zacks Rank of #2 (Buy) right now.

In terms of valuation, VRTX is currently trading at a Forward P/E ratio of 26.85. This represents a premium compared to its industry's average Forward P/E of 25.31.

Meanwhile, VRTX's PEG ratio is currently 1.29. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Medical - Biomedical and Genetics industry currently had an average PEG ratio of 1.59 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 186, putting it in the bottom 27% 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.

To follow VRTX in the coming trading sessions, be sure to utilize Zacks.com.


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