Vertex Pharmaceuticals logged a 2.8% change during today's afternoon session, and is now trading at a price of $333.87 per share.
Vertex Pharmaceuticals returned gains of 25.0% last year, with its stock price reaching a high of $354.46 and a low of $243.17. Over the same period, the stock outperformed the S&P 500 index by 19.0%. More recently, the company's 50-day average price was $332.62. Vertex Pharmaceuticals Incorporated, a biotechnology company, engages in developing and commercializing therapies for treating cystic fibrosis (CF). Based in Boston, MA, the large-cap Health Care company has 4,800 full time employees. Vertex Pharmaceuticals has not offered a dividend during the last year.
An Exceptionally Strong Balance Sheet:
| 2019-12-31 | 2020-12-31 | 2021-12-31 | 2022-12-31 | |
|---|---|---|---|---|
| Revenue (MM) | $4,163 | $6,206 | $7,574 | $8,931 |
| Operating Margins | 28.9% | 46.2% | 36.7% | 48.9% |
| Net Margins | 28.27% | 43.7% | 30.92% | 37.2% |
| Net Income (MM) | $1,177 | $2,712 | $2,342 | $3,322 |
| Net Interest Income | $5,176 | -$35,912 | -$56,600 | $89,800 |
| Depreciation & Amort. | -$106,941 | -$109,515 | -$125,600 | -$148,300 |
| Earnings Per Share | $4.51 | $10.29 | $9.01 | $12.39 |
| EPS Growth | n/a | 128.16% | -12.44% | 37.51% |
| Diluted Shares (MM) | 261 | 263 | 260 | 258 |
| Free Cash Flow (MM) | $1,494 | $2,994 | $2,408 | $3,925 |
| Capital Expenditures (MM) | -$75 | -$260 | -$235 | -$205 |
| Net Current Assets (MM) | $2,376 | $4,760 | $5,682 | $8,443 |
| Current Ratio | 3.83 | 5.02 | 4.81 | 5.22 |
| Net Debt / EBITDA | -1.68 | -1.66 | -2.14 | -2.24 |
Vertex Pharmaceuticals has growing revenues and increasing reinvestment in the business, strong margins with a positive growth rate, and exceptional EPS growth. The company also benefits from an excellent current ratio, low leverage, and consistent free cash flow.
Vertex Pharmaceuticals's Valuation Is in Line With Its Sector Averages:
Vertex Pharmaceuticals has a trailing twelve month P/E ratio of 26.8, compared to an average of 24.45 for the Health Care sector. Based on its EPS guidance of $16.0, the company has a forward P/E ratio of 20.8. According to the 28.8% compound average growth rate of Vertex Pharmaceuticals's historical and projected earnings per share, the company's PEG ratio is 0.93. Taking the weighted average of the company's EPS CAGR and the broader market's 5-year projected EPS growth rate, we obtain a normalized growth rate of 10.8%. On this basis, the company's PEG ratio is 2.5. This suggests that these shares are overvalued. Furthermore, Vertex Pharmaceuticals is likely overvalued compared to the book value of its equity, since its P/B ratio of 5.96 is higher than the sector average of 4.16. The company's shares are currently trading 212.5% above their Graham number. Ultimately, Vertex Pharmaceuticals's strong cash flows, decent earnings multiple, and healthy debt levels factor towards it being fairly valued, its elevated P/B ratio notwithstanding.
Vertex Pharmaceuticals Has an Average Rating of Buy:
The 26 analysts following Vertex Pharmaceuticals have set target prices ranging from $305.0 to $456.0 per share, for an average of $373.15 with a buy rating. As of April 2023, the company is trading -10.9% away from its average target price, indicating that there is an analyst consensus of some upside potential.
Vertex Pharmaceuticals has a very low short interest because 1.2% of the company's shares are sold short. Institutions own 95.9% of the company's shares, and the insider ownership rate stands at 0.16%, suggesting a small amount of insider investors. The largest shareholder is Blackrock Inc., whose 9% stake in the company is worth $7,981,697,426.
