Is VRTX a Portfolio Must Have After Two FDA Nods Ahead of Q4 Earnings?

Vertex Pharmaceuticals Incorporated VRTX will report fourth-quarter and full-year 2024 earnings result on Feb. 10, after market close. The Zacks Consensus Estimate for sales and earnings for the fourth quarter is pegged at $2.77 billion and $3.99 per share, respectively. Earnings estimates for Vertex for 2025 have declined from $18.25 to $18.19 per share over the past 30 days.See the Zacks Earnings Calendar to stay ahead of market-making news.Image Source: Zacks Investment ResearchVRTX's Earnings Surprise HistoryThe company’s performance has been mixed, with its earnings beating expectations in three of the trailing four quarters and missing the same once. It delivered a trailing four-quarter average earnings surprise of 3.26%. In the last reported quarter, Vertex pulled off an earnings surprise of 6.05%.Image Source: Zacks Investment ResearchWhat Does Our Model Say for VRTX?Our proven model predicts 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. This is 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 +0.77% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.Factors Shaping VRTX’s Upcoming Q4 ResultsVertex’s cystic franchise (“CF”) sales continue to grow, driven by higher sales of its blockbuster CF medicine, Trikafta/Kaftrio (Trikafta’s brand name in Europe), in younger age groups.The Zacks Consensus Estimate and our model estimate for Trikafta/Kaftrio sales is currently pegged at $2.58 billion and $2.54 billion, respectively.However, higher Trikafta/Kaftrio sales are likely to have caused sales erosion of Vertex’s other CF drugs — Symdeko (marketed as Symkevi in Europe), Orkambi and Kalydeco.Vertex and partner CRISPR Therapeutics’ CRSP one-shot gene therapy Casgevy was approved for two blood disorders, sickle cell disease (SCD) and transfusion-dependent beta-thalassemia (TDT), in multiple regions in late 2023/early 2024. Casgevy’s approval has diversified Vertex’s commercial opportunities.VRTX’s product revenues in the last reported quarter included $2 million from Casgevy sales. Per management, Casgevy has been witnessing a strong launch so far.Investors will be keen to get more updates related to Casgevy’s sales number during the upcoming earnings call.On the fourth-quarter conference call, investors will likely focus on management’s comments about the launch preparation for its two new products, Alyftrek (vanza triple) and Journavx (suzetrigine).Vertex’s fifth CFTR modulator therapy, Alyftrek (vanza triple), is a next-in-class triple combination regimen that was approved by the FDA in December 2024 for treating people with CF aged six years and older.Journavx (suzetrigine) was approved by the FDA for treating moderate-to-severe acute pain in January 2025.Updates related to Vertex’s other pipeline candidates, which are in mid- to late-stage studies for treating other diseases like APOL1-mediated kidney diseases, alpha-1 antitrypsin deficiency and cell therapy for type I diabetes, are also expected during the upcoming earnings call.Additionally, Vertex is developing an mRNA therapeutic, VX-522, in partnership with Moderna MRNA, for approximately 5,000 people with CF who do not make CFTR protein and who cannot benefit from its CFTR modulators.VRTX's Stock Price Performance & ValuationShares of Vertex have soared 15.9% in the past year against the industry’s 3.6% decline. While the stock has also outperformed the broader Medical sector, it has underperformed the S&P 500 Index. Vertex’s shares are currently trading above its 50-day and 200-day moving averages.VRTX Stock PerformanceImage Source: Zacks Investment ResearchFrom a valuation standpoint, the stock is trading at a premium to the industry. Going by the price/earnings ratio, Vertex’s shares are currently trading at 26.33 forward 12-month earnings value, higher than 16.37 for the industry.Image Source: Zacks Investment ResearchOur Investment Thesis on VRTX StockVertex’s key area of growth remains the CF product franchisee driven by the rapid uptake of Trikafta/Kaftrio. Also, VRTX is preparing for two launches — Journavx (suzetrigine) in acute pain and Alyftrek (vanza triple) in CF in 2025. The new drugs should propel its top line in future quarters.The approval of Casgevy and Journavx has provided the necessary diversification from the CF franchise. Casgevy is expected to contribute significantly to revenues this year onward.The company’s dependence on just the CF franchise for growth was a concern for several analysts but it is gradually resolving it. However, pipeline setbacks remain a concern for investors.In December 2024, Vertex announced unimpressive data from a phase II study evaluating suzetrigine for treating painful lumbosacral radiculopathy (LSR), a form of peripheral neuropathic pain, which showed largely undifferentiated pain reduction from placebo. Despite the unimpressive data in phase II, management decided to forge ahead to a phase III study in this indication, which is considered a risky decision.Stay Invested in VRTX's StockDeclining estimates for 2025 and a premium valuation are likely to make investors wonder if they should sell the stock. However, we believe Vertex is a good stock to have in one’s portfolio based on its strong overall financial performance and robust pipeline progress.Though VRTX’s stock currently looks expensive, we don’t see any need to sell the stock as the company has growth potential. Those who already own the stock may retain it for some time to see if its CF sales continue to rise and how the Journavx, Alyftrek and Casgevy launch progresses.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want 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 Report Moderna, Inc. (MRNA): Free Stock Analysis Report CRISPR Therapeutics AG (CRSP): 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