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Why Is Vertex (VRTX) Up 2.1% Since the Last Earnings Report?
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It has been about a month since the last earnings report for Vertex Pharmaceuticals Incorporated (VRTX - Free Report) . Shares have added about 2.1% in the past month, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Vertex First Quarter Earnings Top, CF Products Sales Strong
Vertex reported first-quarter 2017 earnings per share of $0.13 per share (including the impact of stock-based compensation expense), which beat the Zacks Consensus Estimate of $0.04. Notably, the company had posted a loss of $0.13 in the year-ago quarter. Strong product revenues and cost-control led to higher profits in the quarter.
Excluding stock-based compensation expense, first-quarter adjusted earnings stood at $0.41 per share compared with the year-ago figure of $0.09.
Including upfront revenues of $230 million received from German pharma company, Merck KGaA for the out-licensing of four oncology programs; restructuring costs and other adjustments, reported earnings were $0.99 per share in the first quarter of 2017 against a year-ago loss of $0.17 per share.
Vertex reported revenues of $714.7 million in the first quarter, up 79.5% year over year gaining from ae upfront payment from Merck KGaA. Excluding the upfront revenues, the adjusted total revenue was $482.3 million, which surpassed the Zacks Consensus Estimate of $459.1 million by 5.3% and has increased 21% year over year.
CF Franchise Sales Rise
Vertex’s first-quarter revenues consisted of sales from cystic fibrosis (CF) products — Kalydeco and Orkambi, collaborative ($232.6 million) and royalty revenues ($1.5 million). CF product revenues were $481 million in the first quarter, up 22% year over year.
The company has reported a 9% increase in Kalydeco sales to $186 million. Kalydeco sales gained from one-time adjustments, mainly related to European reimbursement agreements.
Orkambi (lumacaftor/ivacaftor) delivered sales of $295.0 million, up 32% year over year. On a sequential basis, Orkambi sales rose around 7% in the first quarter, supported by a rapid uptake in pediatric indication for which approval was received in Sep 2016.
Cost Discussion
Adjusted (including stock-based compensation expenses) research and development expenses increased 5.9% to $271.4 million in the first quarter, due to higher costs related to progress on the CF pipeline. Adjusted (including stock-based compensation expenses) selling, general and administrative (SG&A) expenses increased 5.5% to $110.5 million due to an increased investment to support the global launch of Orkambi.
Maintains 2017 Guidance
Vertex maintained its 2017 guidance for Orkambi revenues, which was provided in early Jan 2017, while raising the same for Kalydeco. Orkambi revenues are expected in the range of $1.1–$1.3 billion while Kalydeco revenues are estimated in the range of $710 to $730 million, higher than $690–$710 million, guided previously. Management said the uptick in guidance was the result of a one-time gain received this quarter as well as strong underlying demand trends for the product.
Management continues to believe that Orkambi sales growth will be dependent on reimbursement discussions in Europe in 2017. Specifically, the company has mentioned that if it gains reimbursement in France this year, it would contribute significantly to revenue growth this year.
Combined adjusted research and development (R&D) and selling, general and administrative (SG&A) expenses in 2017 are anticipated in the range of $1.25–$1.30 billion. Costs are expected to be higher than 2016 levels, due to increased costs related to CF pipeline development and an increased commercial investment to support the Orkambi launch.
How Have Estimates Been Moving Since Then?
It turns out fresh estimates have trended downward during the past month. There have been two revisions higher for the current quarter compared to four lower. In the past month, the consensus estimate has shifted lower by 62.6% due to these changes.
Vertex Pharmaceuticals Incorporated Price and Consensus
At this time, Vertex's stock has a strong Growth Score of 'A', though it is lagging a lot on the momentum front with a 'C'. The stock was allocated a grade of 'D' on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for growth investors than momentum investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We expect in-line returns from the stock in the next few months.
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Why Is Vertex (VRTX) Up 2.1% Since the Last Earnings Report?
It has been about a month since the last earnings report for Vertex Pharmaceuticals Incorporated (VRTX - Free Report) . Shares have added about 2.1% in the past month, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Vertex First Quarter Earnings Top, CF Products Sales Strong
Vertex reported first-quarter 2017 earnings per share of $0.13 per share (including the impact of stock-based compensation expense), which beat the Zacks Consensus Estimate of $0.04. Notably, the company had posted a loss of $0.13 in the year-ago quarter. Strong product revenues and cost-control led to higher profits in the quarter.
Excluding stock-based compensation expense, first-quarter adjusted earnings stood at $0.41 per share compared with the year-ago figure of $0.09.
Including upfront revenues of $230 million received from German pharma company, Merck KGaA for the out-licensing of four oncology programs; restructuring costs and other adjustments, reported earnings were $0.99 per share in the first quarter of 2017 against a year-ago loss of $0.17 per share.
Vertex reported revenues of $714.7 million in the first quarter, up 79.5% year over year gaining from ae upfront payment from Merck KGaA. Excluding the upfront revenues, the adjusted total revenue was $482.3 million, which surpassed the Zacks Consensus Estimate of $459.1 million by 5.3% and has increased 21% year over year.
CF Franchise Sales Rise
Vertex’s first-quarter revenues consisted of sales from cystic fibrosis (CF) products — Kalydeco and Orkambi, collaborative ($232.6 million) and royalty revenues ($1.5 million). CF product revenues were $481 million in the first quarter, up 22% year over year.
The company has reported a 9% increase in Kalydeco sales to $186 million. Kalydeco sales gained from one-time adjustments, mainly related to European reimbursement agreements.
Orkambi (lumacaftor/ivacaftor) delivered sales of $295.0 million, up 32% year over year. On a sequential basis, Orkambi sales rose around 7% in the first quarter, supported by a rapid uptake in pediatric indication for which approval was received in Sep 2016.
Cost Discussion
Adjusted (including stock-based compensation expenses) research and development expenses increased 5.9% to $271.4 million in the first quarter, due to higher costs related to progress on the CF pipeline. Adjusted (including stock-based compensation expenses) selling, general and administrative (SG&A) expenses increased 5.5% to $110.5 million due to an increased investment to support the global launch of Orkambi.
Maintains 2017 Guidance
Vertex maintained its 2017 guidance for Orkambi revenues, which was provided in early Jan 2017, while raising the same for Kalydeco. Orkambi revenues are expected in the range of $1.1–$1.3 billion while Kalydeco revenues are estimated in the range of $710 to $730 million, higher than $690–$710 million, guided previously. Management said the uptick in guidance was the result of a one-time gain received this quarter as well as strong underlying demand trends for the product.
Management continues to believe that Orkambi sales growth will be dependent on reimbursement discussions in Europe in 2017. Specifically, the company has mentioned that if it gains reimbursement in France this year, it would contribute significantly to revenue growth this year.
Combined adjusted research and development (R&D) and selling, general and administrative (SG&A) expenses in 2017 are anticipated in the range of $1.25–$1.30 billion. Costs are expected to be higher than 2016 levels, due to increased costs related to CF pipeline development and an increased commercial investment to support the Orkambi launch.
How Have Estimates Been Moving Since Then?
It turns out fresh estimates have trended downward during the past month. There have been two revisions higher for the current quarter compared to four lower. In the past month, the consensus estimate has shifted lower by 62.6% due to these changes.
Vertex Pharmaceuticals Incorporated Price and Consensus
Vertex Pharmaceuticals Incorporated Price and Consensus | Vertex Pharmaceuticals Incorporated Quote
VGM Scores
At this time, Vertex's stock has a strong Growth Score of 'A', though it is lagging a lot on the momentum front with a 'C'. The stock was allocated a grade of 'D' on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for growth investors than momentum investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We expect in-line returns from the stock in the next few months.