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

Zacks Equity Research
·3 min read

Vertex Pharmaceuticals (VRTX) closed at $237 in the latest trading session, marking a +1.76% move from the prior day. The stock outpaced the S&P 500's daily gain of 0.55%. At the same time, the Dow added 0.18%, and the tech-heavy Nasdaq gained 1.03%.

Prior to today's trading, shares of the drugmaker had gained 3.95% over the past month. This has outpaced the Medical sector's gain of 2.05% and the S&P 500's gain of 3.13% in that time.

VRTX will be looking to display strength as it nears its next earnings release. On that day, VRTX is projected to report earnings of $2.61 per share, which would represent year-over-year growth of 53.53%. Our most recent consensus estimate is calling for quarterly revenue of $1.57 billion, up 11.05% from the year-ago period.

Any recent changes to analyst estimates for VRTX should also be noted by investors. 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.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. 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 currently has a Zacks Rank of #3 (Hold).

Investors should also note VRTX's current valuation metrics, including its Forward P/E ratio of 20.98. Its industry sports an average Forward P/E of 25.45, so we one might conclude that VRTX is trading at a discount comparatively.

We can also see that VRTX currently has a PEG ratio of 1.03. 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. Medical - Biomedical and Genetics stocks are, on average, holding a PEG ratio of 1.14 based on yesterday's closing prices.

The Medical - Biomedical and Genetics industry is part of the Medical sector. This group has a Zacks Industry Rank of 192, putting it in the bottom 25% 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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