How Analysts Think Investors Should Play Vertex Pharmaceuticals



Vertex’s share price estimates 

Vertex Pharmaceuticals (VRTX) will report its 2Q16 earnings on July 27, 2016. VRTX is a global biotechnology company based in Boston, Massachusetts. Vertex primarily focuses on cystic fibrosis (or CF) drugs.

The table above details 19 brokerage firms and their estimated prices for Vertex. The consensus 12-month target price of the company is $108.90. This translates to an ~20.7% return compared to Vertex’s closing price of $90.20 on July 15, 2016.

According to the Bloomberg consensus of 23 brokerage firms recorded on July 15, 2016, 69.6% of the brokerage firms rated Vertex as a “buy,” while 30.4% of the broker firms rated the company as a “hold.” None of the brokerage firms issued a “sell” rating on the stock.

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Peer recommendations

According to a Bloomberg survey of 26 analysts on July 15, 2016, 61.5% of analysts issued a “buy” rating for Pfizer (PFE), while 38.5% rated the stock a “hold.” Considering a 12-month consensus target price of $38.70, Pfizer presents an opportunity to earn 5.2% over the investment horizon.

According to 17 analysts’ ratings in a Bloomberg consensus dated July 15, 2016, 82.4% believed Shire (SHPG) is a “buy,” whereas 17.6% suggested a “hold.” None of the analysts recommended a “sell” for the stock. With a 12-month target price of $243.60, Shire presents a return potential of 27.3% over the period.

A Bloomberg consensus of five analysts on July 15, 2016, indicated that 60% issued a “buy” rating for Sanofi (SNY) and 40% recommended a “hold.” SNY presents a return potential of 19.2% over a 12-month period against its closing price of $41.68 on July 15, 2016.

Biotechnology is a highly volatile industry. To mitigate the risk of direct investment in these stocks, you can choose to invest in ETFs. One such option is the iShares NASDAQ Biotechnology ETF (IBB). IBB has ~3.8% of its total holdings in Vertex.

In the next part of the series, we’ll have a look at expectations from Vertex in the upcoming period.


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