Investors Heavily Search Vertex Pharmaceuticals Incorporated (VRTX): Here is What You Need to Know

Vertex Pharmaceuticals (VRTX) is one of the stocks most watched by Zacks.com visitors lately. So, it might be a good idea to review some of the factors that might affect the near-term performance of the stock.Over the past month, shares of this drugmaker have returned -8.6%, compared to the Zacks S&P 500 composite's +5.8% change. During this period, the Zacks Medical - Biomedical and Genetics industry, which Vertex falls in, has lost 3.9%. The key question now is: What could be the stock's future direction?Although media reports or rumors about a significant change in a company's business prospects usually cause its stock to trend and lead to an immediate price change, there are always certain fundamental factors that ultimately drive the buy-and-hold decision.Earnings Estimate RevisionsHere at Zacks, we prioritize appraising the change in the projection of a company's future earnings over anything else. That's because we believe the present value of its future stream of earnings is what determines the fair value for its stock.We essentially look at how sell-side analysts covering the stock are revising their earnings estimates to reflect the impact of the latest business trends. And if earnings estimates go up for a company, the fair value for its stock goes up. A higher fair value than the current market price drives investors' interest in buying the stock, leading to its price moving higher. This is why empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.Vertex is expected to post earnings of $4.07 per share for the current quarter, representing a year-over-year change of -3.1%. Over the last 30 days, the Zacks Consensus Estimate has changed -5.3%.The consensus earnings estimate of $0.50 for the current fiscal year indicates a year-over-year change of -96.7%. This estimate has changed +10.4% over the last 30 days.For the next fiscal year, the consensus earnings estimate of $18.55 indicates a change of +3,610% from what Vertex is expected to report a year ago. Over the past month, the estimate has changed +8%.Having a strong externally audited track record, our proprietary stock rating tool, the Zacks Rank, offers a more conclusive picture of a stock's price direction in the near term, since it effectively harnesses the power of earnings estimate revisions. Due to the size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, Vertex is rated Zacks Rank #3 (Hold).The chart below shows the evolution of the company's forward 12-month consensus EPS estimate:12 Month EPSProjected Revenue GrowthEven though a company's earnings growth is arguably the best indicator of its financial health, nothing much happens if it cannot raise its revenues. It's almost impossible for a company to grow its earnings without growing its revenue for long periods. Therefore, knowing a company's potential revenue growth is crucial.For Vertex, the consensus sales estimate for the current quarter of $2.77 billion indicates a year-over-year change of +10.1%. For the current and next fiscal years, $10.88 billion and $11.78 billion estimates indicate +10.3% and +8.2% changes, respectively.Last Reported Results and Surprise HistoryVertex reported revenues of $2.77 billion in the last reported quarter, representing a year-over-year change of +11.6%. EPS of $4.38 for the same period compares with $4.08 a year ago.Compared to the Zacks Consensus Estimate of $2.67 billion, the reported revenues represent a surprise of +3.62%. The EPS surprise was +6.05%.Over the last four quarters, Vertex surpassed consensus EPS estimates three times. The company topped consensus revenue estimates three times over this period.ValuationWithout considering a stock's valuation, no investment decision can be efficient. In predicting a stock's future price performance, it's crucial to determine whether its current price correctly reflects the intrinsic value of the underlying business and the company's growth prospects.Comparing the current value of a company's valuation multiples, such as its price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF), to its own historical values helps ascertain whether its stock is fairly valued, overvalued, or undervalued, whereas comparing the company relative to its peers on these parameters gives a good sense of how reasonable its stock price is.As part of the Zacks Style Scores system, the Zacks Value Style Score (which evaluates both traditional and unconventional valuation metrics) organizes stocks into five groups ranging from A to F (A is better than B; B is better than C; and so on), making it helpful in identifying whether a stock is overvalued, rightly valued, or temporarily undervalued.Vertex is graded D on this front, indicating that it is trading at a premium to its peers. Click here to see the values of some of the valuation metrics that have driven this grade.ConclusionThe facts discussed here and much other information on Zacks.com might help determine whether or not it's worthwhile paying attention to the market buzz about Vertex. However, its Zacks Rank #3 does suggest that it may perform in line with the broader market in the near term.Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.This top pick is among the most innovative financial firms. With a fast-growing customer base (already 50+ million) and a diverse set of cutting edge solutions, this stock is poised for big gains. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Vertex Pharmaceuticals Incorporated (VRTX): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks