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Vertex (VRTX) Stock Before Q2 Earnings: To Buy or Not to Buy?
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Vertex Pharmaceuticals Incorporated (VRTX - Free Report) is scheduled to report second-quarter 2024 results on Aug 1, after market close. The Zacks Consensus Estimate for the to-be-reported quarter’s revenues is pegged at $2.65 billion, while the same for earnings is pinned at $4.04 per share.
In the past 30 days, estimates for Vertex’s 2024 earnings per share (EPS) have remained constant at $16.78. During the same time frame, the forecast for the company’s 2025 EPS has deteriorated from $17.71 to $17.69.
Image Source: Zacks Investment Research
Earnings Surprise History
Vertex’s performance has been impeccable over the trailing four quarters. The company beat earnings estimates in each of the last four reported quarters, delivering an earnings surprise of 5.92%, on average. In the last reported quarter, the company came up with an earnings surprise of 16.10%.
Image Source: Zacks Investment Research
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for Vertex this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not the case here, as you will see below. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
Vertex currently markets four cystic fibrosis (CF) products — Trikafta/Kaftrio, Symdeko (marketed as Symkevi in Europe), Orkambi and Kalydeco.
The company’s revenues in the to-be-reported quarter are likely to have been driven by the robust uptake of its blockbuster CF medicine, Trikafta/Kaftrio (Trikafta’s brand name in Europe). Sales growth of the drug is expected to have been driven by solid demand in the international market, coupled with expanded use in children (aged between two and five years) with CF in the United States. The Zacks Consensus Estimate and our model estimate for Trikafta/Kaftrio sales are both currently pegged at $2.4 billion.
However, higher Trikafta/Kaftrio sales are likely to have caused sales erosion of Vertex’s other CF drugs.
While CF remains the main area of focus, Vertex saw rapid success with its non-CF pipeline candidates in the past year.
Vertex and partner CRISPR Therapeutics’ (CRSP - Free Report) one-shot gene therapy, Casgevy, was approved for two blood disorders, sickle cell disease and transfusion-dependent beta thalassemia, in the U.K., the United States, the EU and some other countries in 2023/early 2024. These approvals diversified its commercial opportunity.
In the first quarter, VRTX did not announce any sales figures for Casgevy. On the first-quarter conference call, Vertex said it will recognize revenues for Casgevy near the end of the patient journey at infusion. It expects to record Casgevy sales from the second half of 2024.
Investors can expect an update regarding the progress made with the launch activities for Casgevy on the upcoming earnings call.
Apart from Vertex’s marketed portfolio of drugs, updates are also anticipated regarding pipeline candidates for which near-term launches are planned. These include suzetrigine (formerly known as VX-548) for acute pain and vanzacaftor triple for CF.
Investors are paying a lot of attention to pain asset suzetrigine, which, they believe, has blockbuster potential. Vertex has initiated a rolling new drug application (NDA) submission process for suzetrigine across a broad label in moderate-to-severe acute pain. It is on track to complete the NDA submission soon.
Vertex is also looking to expand suzetrigine’s indication to treat several neuropathic pain indications. Pain is an area with limited treatment options, mostly highly addictive opioid-based medications.
Earlier this month, Vertex announced that the NDA is seeking approval for vanza triple therapy for treating CF patients aged 6 years and above, which has been accepted by the FDA for review. With the FDA granting a priority review to the NDA, a decision from the regulatory body is expected on Jan 2, 2025. An application seeking marketing authorization for vanza triple therapy to treat CF has also been filed in the EU.
VRTX’s blockbuster CF portfolio coupled with strong pipeline progress indicates significant growth opportunities in the future. Let us delve deeper to understand whether to buy, sell, or hold this stock.
Price Performance & Valuation
Year to date, the stock has surged 21.7% compared with the industry’s rise of 0.5%. During the same time frame, VRTX also outperformed the sector and the S&P 500.
Image Source: Zacks Investment Research
Vertex is trading at a premium to the industry. Going by the price/sales ratio, the stock currently trades at 12.7 trailing 12-month sales per share, higher than 2.62 for the industry.
Image Source: Zacks Investment Research
Investment Thesis
Vertex is a promising stock that is witnessing increasing year-over-year revenues from its CF franchise, primarily driven by the sales of triple therapy, Trikafta/Kaftrio. With its four CF medicines, Vertex is treating nearly 75% of the 92,000 patients living with CF in the United States, Europe, Canada and Australia.
New reimbursement agreements in ex-U.S. markets and expanded use in younger age groups are driving Trikafta/Kaftrio sales higher.
The company’s efforts in developing new drugs to increase its CF market share are also commendable. Its regulatory application for vanza triple therapy is already under review in the United States. Vertex believes that vanza triple therapy has the potential for enhanced patient benefit than Trikafta patients and can potentially treat CF patients who have discontinued Trikafta or its other CF medicines. Moreover, its once-daily dosing requirement will lower the treatment burden for patients. Subject to approval, vanza triple is expected to further boost the company’s CF sales.
Vertex, in partnership with Moderna (MRNA - Free Report) , is developing an mRNA therapeutic, VX-522, for approximately 5,000 people with CF who do not make CFTR protein and who cannot benefit from its CFTR modulators.
Additionally, the approval of Casgevy for two blood disorders in multiple regions has diversified Vertex’s commercial opportunity. It is no longer dependent only on its CF product sales. Potential approval of suzetrigine for acute pain will further reduce dependency on the CF franchise.
Conclusion
Vertex faces minimal competition in the CF franchise. Despite a slight slowdown in the growth rate, the sales of its CF portfolio are expected to remain strong. The company has also been gradually addressing its overdependency issue on CF products for generating revenues, with Casgevy and suzetrigine (if approved).
We strongly believe that VRTX is a great stock to have in one’s portfolio based on its strong overall financial performance and robust pipeline progress. Investors who already own the stock should continue to retain it no matter how the second-quarter results pan out.
Though Vertex currently trades at a premium to the industry, any major dips in the stock’s price can be used as an opportunity to buy the stock for long-term gains.
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Vertex (VRTX) Stock Before Q2 Earnings: To Buy or Not to Buy?
Vertex Pharmaceuticals Incorporated (VRTX - Free Report) is scheduled to report second-quarter 2024 results on Aug 1, after market close. The Zacks Consensus Estimate for the to-be-reported quarter’s revenues is pegged at $2.65 billion, while the same for earnings is pinned at $4.04 per share.
In the past 30 days, estimates for Vertex’s 2024 earnings per share (EPS) have remained constant at $16.78. During the same time frame, the forecast for the company’s 2025 EPS has deteriorated from $17.71 to $17.69.
Earnings Surprise History
Vertex’s performance has been impeccable over the trailing four quarters. The company beat earnings estimates in each of the last four reported quarters, delivering an earnings surprise of 5.92%, on average. In the last reported quarter, the company came up with an earnings surprise of 16.10%.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for Vertex this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not the case here, as you will see below. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
Vertex has an Earnings ESP of 0.00% and a Zacks Rank #3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Factors Shaping Upcoming Results
Vertex currently markets four cystic fibrosis (CF) products — Trikafta/Kaftrio, Symdeko (marketed as Symkevi in Europe), Orkambi and Kalydeco.
The company’s revenues in the to-be-reported quarter are likely to have been driven by the robust uptake of its blockbuster CF medicine, Trikafta/Kaftrio (Trikafta’s brand name in Europe). Sales growth of the drug is expected to have been driven by solid demand in the international market, coupled with expanded use in children (aged between two and five years) with CF in the United States. The Zacks Consensus Estimate and our model estimate for Trikafta/Kaftrio sales are both currently pegged at $2.4 billion.
However, higher Trikafta/Kaftrio sales are likely to have caused sales erosion of Vertex’s other CF drugs.
While CF remains the main area of focus, Vertex saw rapid success with its non-CF pipeline candidates in the past year.
Vertex and partner CRISPR Therapeutics’ (CRSP - Free Report) one-shot gene therapy, Casgevy, was approved for two blood disorders, sickle cell disease and transfusion-dependent beta thalassemia, in the U.K., the United States, the EU and some other countries in 2023/early 2024. These approvals diversified its commercial opportunity.
In the first quarter, VRTX did not announce any sales figures for Casgevy. On the first-quarter conference call, Vertex said it will recognize revenues for Casgevy near the end of the patient journey at infusion. It expects to record Casgevy sales from the second half of 2024.
Investors can expect an update regarding the progress made with the launch activities for Casgevy on the upcoming earnings call.
Apart from Vertex’s marketed portfolio of drugs, updates are also anticipated regarding pipeline candidates for which near-term launches are planned. These include suzetrigine (formerly known as VX-548) for acute pain and vanzacaftor triple for CF.
Investors are paying a lot of attention to pain asset suzetrigine, which, they believe, has blockbuster potential. Vertex has initiated a rolling new drug application (NDA) submission process for suzetrigine across a broad label in moderate-to-severe acute pain. It is on track to complete the NDA submission soon.
Vertex is also looking to expand suzetrigine’s indication to treat several neuropathic pain indications. Pain is an area with limited treatment options, mostly highly addictive opioid-based medications.
Earlier this month, Vertex announced that the NDA is seeking approval for vanza triple therapy for treating CF patients aged 6 years and above, which has been accepted by the FDA for review. With the FDA granting a priority review to the NDA, a decision from the regulatory body is expected on Jan 2, 2025. An application seeking marketing authorization for vanza triple therapy to treat CF has also been filed in the EU.
VRTX’s blockbuster CF portfolio coupled with strong pipeline progress indicates significant growth opportunities in the future. Let us delve deeper to understand whether to buy, sell, or hold this stock.
Price Performance & Valuation
Year to date, the stock has surged 21.7% compared with the industry’s rise of 0.5%. During the same time frame, VRTX also outperformed the sector and the S&P 500.
Vertex is trading at a premium to the industry. Going by the price/sales ratio, the stock currently trades at 12.7 trailing 12-month sales per share, higher than 2.62 for the industry.
Investment Thesis
Vertex is a promising stock that is witnessing increasing year-over-year revenues from its CF franchise, primarily driven by the sales of triple therapy, Trikafta/Kaftrio. With its four CF medicines, Vertex is treating nearly 75% of the 92,000 patients living with CF in the United States, Europe, Canada and Australia.
New reimbursement agreements in ex-U.S. markets and expanded use in younger age groups are driving Trikafta/Kaftrio sales higher.
The company’s efforts in developing new drugs to increase its CF market share are also commendable. Its regulatory application for vanza triple therapy is already under review in the United States. Vertex believes that vanza triple therapy has the potential for enhanced patient benefit than Trikafta patients and can potentially treat CF patients who have discontinued Trikafta or its other CF medicines. Moreover, its once-daily dosing requirement will lower the treatment burden for patients. Subject to approval, vanza triple is expected to further boost the company’s CF sales.
Vertex, in partnership with Moderna (MRNA - Free Report) , is developing an mRNA therapeutic, VX-522, for approximately 5,000 people with CF who do not make CFTR protein and who cannot benefit from its CFTR modulators.
Additionally, the approval of Casgevy for two blood disorders in multiple regions has diversified Vertex’s commercial opportunity. It is no longer dependent only on its CF product sales. Potential approval of suzetrigine for acute pain will further reduce dependency on the CF franchise.
Conclusion
Vertex faces minimal competition in the CF franchise. Despite a slight slowdown in the growth rate, the sales of its CF portfolio are expected to remain strong. The company has also been gradually addressing its overdependency issue on CF products for generating revenues, with Casgevy and suzetrigine (if approved).
We strongly believe that VRTX is a great stock to have in one’s portfolio based on its strong overall financial performance and robust pipeline progress. Investors who already own the stock should continue to retain it no matter how the second-quarter results pan out.
Though Vertex currently trades at a premium to the industry, any major dips in the stock’s price can be used as an opportunity to buy the stock for long-term gains.