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Vertex Pharmaceuticals: What Are Analysts’ Estimates?

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Jan. 25 2016, Updated 12:46 p.m. ET

Share price estimates for Vertex

Vertex Pharmaceuticals (VRTX) based in Boston, Massachusetts, is a global biotechnology company. The company is focused on developing innovative drugs for serious life-threatening diseases. The company’s major focus area is hereditary disorder cystic fibrosis (or CF). It’s also involved in HIV (human immunodeficiency virus) and the hepatitis C virus (or HCV).

According to its event calendar, Vertex Pharmaceuticals will report earnings for 4Q15 and fiscal 2015 on January 27, 2016.

The above table details 17 brokerage firms and their estimated prices for Vertex. The consensus 12-month target price is $148.90 with a horizon of 12 months. This translates to a ~52.1% return compared to Vertex’s closing price of $97.90 on January 18, 2016.

According to a Bloomberg consensus of 23 brokerage firms recorded on January 14, 2016, 69.6% of brokerage firms rated Vertex as a “buy,” while 30.4% rated it a “hold.” None of the brokerage firms issued a “sell” rating for the stock.

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Latest quarter performance of  Vertex

Vertex released earnings for the third quarter of 2015 on October 28, 2015. The company reported 73.1% year-over-year growth in sales for the third quarter of 2015. For the first nine months of 2015, it experienced ~41% revenue growth compared to the same period of the previous year.

The graph above details the movement in Vertex’s share price.

Share price movement

Following impressive earnings data, Vertex stock price rose to $133 in November 2015. The growth came from Kalydeco, which registered 31% year-over-year growth during the third quarter of 2015. The drug is indicated for the treatment of cystic fibrosis.

Kalydeco was commercialized in 2012 in the United States and certain European countries. CF affects ~30,000 people in the United States. Out of this population, ~4% are believed to have the G551D mutation. So the target population for the disease is ~1,200. During March 2015, the drug was further approved for use in children suffering from CF who are two to five years old.

The Cystic Fibrosis Foundation helps discover drugs for patients with CF. This foundation is helping companies such as Pfizer (PFE), Shire (SHPG), and Genzyme, a Sanofi (SNY) company, by providing them with research program funding. Vertex pays royalties to the Cystic Fibrosis Foundation Therapeutics on the sale of Kalydeco and Orkambi.

To diversify the risk of investing directly in the equity of Vertex Pharmaceuticals, investors can look for options such as the iShares Nasdaq Biotechnology ETF (IBB). IBB holds 3.1% of its total holdings in Vertex Pharmaceuticals stock.

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