Is It Too Late to Buy Vertex Pharmaceuticals Stock?
Vertex Pharmaceuticals (NASDAQ: VRTX) stands as a beacon in the fast-paced pharmaceutical industry, notably for its groundbreaking advancements in cystic fibrosis treatments. The company’s journey from a pivotal player in a niche market to a behemoth with a market capitalization of an impressive $115 billion has caught the eye of many investors. This valuation not only surpasses the likes of industry giants such as Bristol Myers Squibb but also raises an important question: with such remarkable growth and a robust valuation, is it ever too late for investors to consider Vertex Pharmaceuticals a viable addition to their portfolio, or has the stock reached its zenith?
Over the recent years, Vertex has shown commendable growth. Notably, the company’s revenue saw a significant jump of 59%, from $6.2 billion in 2020 to $9.9 billion in 2023. However, a closer look at its quarterly year-over-year growth rate paints a different picture. The recent growth rate of 13% doesn’t quite align with the expectations one might have for a company trading at nearly 30 times its earnings, particularly for those anticipating further ascents in its stock price.
The optimism around Vertex doesn’t end with its current financials. The company’s gene editing therapy, Casgevy, recently received approval for treating transfusion-dependent beta thalassemia, following its nod for sickle cell disease treatment. Casgevy is poised to become a blockbuster, potentially raking in over $2 billion annually. Additionally, Vertex’s foray into pain management with VX-548, a non-opioid medication effective in acute pain treatment and possibly chronic pain, anticipates regulatory approval. Projections estimate VX-548’s sales could peak beyond $5 billion.
Vertex continues to explore numerous avenues for growth, with an active pipeline that includes trials for type 1 diabetes treatments and other chronic conditions. An especially promising candidate, inaxaplin, is in late-stage trials for APOL1-mediated kidney disease. Furthermore, Vertex’s strategic acquisition of Alpine Immune Sciences for $4.9 billion promises to augment its portfolio with povetacicept, a versatile candidate with potential applications in various diseases, including IgA nephropathy.
The company’s proactive strategy and diversified pipeline underscore a potential that extends beyond its current stock performance. Despite Vertex’s remarkable gains in the past few years, its favorable price/earnings-to-growth (PEG) ratio of 0.6 suggests that it may still be a compelling buy for long-term investors, presenting a possibly undervalued stock in light of its future growth prospects.
While some may wonder if they’ve missed the boat with Vertex Pharmaceuticals, the company’s ongoing initiatives, coupled with its strategic investments and promising pipeline, indicate that opportunities for growth still abound. For investors with a horizon set on the long term, Vertex Pharmaceuticals might just be the gem they’re looking to add to their portfolios.
