Vertex Pharmaceuticals (VRTX) — founded in 1989 in Cambridge, Massachusetts — develops therapies to address cystic fibrosis and other diseases, explains Jasper Hellweg, an analyst with Argus Research, a leading independent Wall Street research firm.
Vertex Pharmaceuticals continues to benefit from high sales of Trikafta (its triple-combination CF regimen), pipeline progress, and partnerships with other organizations.
While Vertex is now able to treat most of the 83,000 cystic fibrosis patients in North America, Europe, and Australia, management believes that it could treat up to 90% of all people with CF if it receives approval for expanded indications.
The company continues to gain approvals for younger age groups for its cystic fibrosis drugs and to expand the number of countries providing reimbursement coverage for these products. It is also pursuing genetic therapies to address the remaining 10% of CF patients.
In addition, Vertex has announced the advancement of an investigational program targeting alpha-1 antitrypsin deficiency (AATD), a rare, genetic disease characterized by a protein folding defect that can lead to liver and lung disease.
Vertex is also partnering with other companies on drug development. On September 27, Vertex and partner CRISPR Therapeutics (CRSP) announced the global regulatory submissions for exagamglogene autotemcel (exa-cel) as a potential one-time treatment for sickle cell disease (SCD) and transfusion-dependent beta thalassemia (TDT).
Vertex recently reported 3Q results that topped expectations for both revenue and earnings. On October 27, the company reported 18% growth in total revenue, to $2.33 billion, beating the consensus by $107 million. Non-GAAP EPS rose 14% to $4.01, beating the consensus by $0.37.
Turning to our estimates, we are raising our 2022 EPS estimate to $14.70 from $14.35 reflecting the strong growth in sales of Trikafta/Kaftrio and the expanded indication for Orkambi. We look for growth to continue in 2023, driven by pipeline advances and new indications, and are raising our EPS estimate to $16.00 from $15.65, implying growth of 9% from our 2022 estimate.
Although Vertex has only recently turned profitable, we expect growth to continue, driven by additional indications for established products, international expansion, increased reimbursement coverage, and the launch of new drugs.
The stock is trading at 19-times our 2023 EPS estimate, below the peer average of 26 and well below the five-year historical average of 33. As such, we are reiterating our buy rating. Our price target is $340, raised from $320.
