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Vertex Pharmaceuticals (VRTX) Dips More Than Broader Markets: What You Should Know

Zacks Equity Research

Vertex Pharmaceuticals (VRTX) closed the most recent trading day at $272.82, moving -1.51% from the previous trading session. This change lagged the S&P 500's daily loss of 0.34%. Elsewhere, the Dow gained 0.05%, while the tech-heavy Nasdaq lost 0.69%.

Wall Street will be looking for positivity from VRTX as it approaches its next earnings report date. The company is expected to report EPS of $2.09, up 65.87% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $1.40 billion, up 48.8% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $8.80 per share and revenue of $5.71 billion. These totals would mark changes of +65.1% and +37.08%, respectively, from last year.

Investors should also note any recent changes to analyst estimates for VRTX. 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.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. The Zacks Consensus EPS estimate remained stagnant within the past month. VRTX currently has a Zacks Rank of #1 (Strong Buy).

Looking at its valuation, VRTX is holding a Forward P/E ratio of 31.48. Its industry sports an average Forward P/E of 29.51, so we one might conclude that VRTX is trading at a premium comparatively.

Investors should also note that VRTX has a PEG ratio of 1.12 right now. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Medical - Biomedical and Genetics was holding an average PEG ratio of 1.88 at yesterday's closing price.

The Medical - Biomedical and Genetics industry is part of the Medical sector. This group has a Zacks Industry Rank of 24, putting it in the top 10% 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.

Make sure to utilize Zacks. Com to follow all of these stock-moving metrics, and more, in the coming trading sessions.


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