Vertex Pharmaceuticals Incorporated (VRTX) disclosed strong financial performance for the first quarter of 2024, suggesting advancements in its research and development pipeline. The stock took the outcome positively and showed a decent upward pressure immediately.
VRTX Q1 Earnings Review
VRTX's non-GAAP operating income increased by 48.1% to $1.34 billion compared to the previous year, whereas net product revenues increased by 13.3% annually to $2.69 billion.
The non-GAAP net income amounted to $1.24 billion, corresponding to $4.76 per common share. This represents an exceptional 5e6% growth compared to the previous year. Nevertheless, VRTX recorded $10.17 billion in cash reserves and marketable securities as of March 31, 2024, reflecting a decline from the $11.22 billion held at the close of business on December 31, 2023.
In terms of both EPS and revenue, Vertex exceeded Wall Street's forecasts. In the first quarter, the company's revenue surpassed analysts' expectations by 4.3%, while its earnings per share surpassed the consensus estimate by 17.2%. This quarter represents the fourth row in which Vertex has surpassed its earnings per share projections.
Vertex Developments
Vertex recently executed a definitive agreement to procure Alpine Immune Sciences, Inc. for an estimated cash payment of $4.9 billion. The acquisition of povetacicept, a Phase 3-ready asset with the potential to be utilized in the treatment of IgA nephropathy, strengthens Vertex's pipeline.
According to the CEO of VRTX, this acquisition is advantageous from a strategic standpoint and is consistent with the organization's mission to fill voids in niche markets. In addition, the objective is to incorporate ALPN's protein engineering and immunotherapy capabilities into Vertex's portfolio.
Furthermore, during the first quarter of 2024, VRTX completed a clinical milestone for VX-670 in DM1, thereby inducing Entrada to receive a $75 million milestone payment.
VRTX Analysts Projection
Analysts predict revenue growth of 6.7% annually, with a consensus estimate of $2.66 billion for the fiscal second quarter concluding in June 2024. The EPS consensus estimate for the current quarter indicates an annual increase of 7.2%. In three of the previous four quarters, VRTX has surpassed revenue projections.
Revenue and earnings per share (EPS) are anticipated to increase by 9% and 11.6% annually, respectively, to $10.75 billion and $17.02 for the full fiscal year ending December 2024. In anticipation of the fiscal year 2025, analysts project revenue and earnings per share (EPS) to increase by 6.7% and 8.8% annually, respectively, to reach $11.70 billion and $18.16.
VRTX Key Metrics
VRTX's forward non-GAAP PEG is recorded at 0.75x, notably diminished compared to the industry mean of 1.89x. Additionally, at 26.19, its forward P/E ratio is less than the industry average of 27.53x. In addition, the stock's trailing 12-month EV/EBIT ratio is 20.50x, 9.6% below the industry average.
VRTX's trailing 12-month EBITDA margin of 44.87% is significantly greater than the industry average. In addition, its ROCE, ROTA, and trailing 12-month net income margin all exceed industry averages, indicating robust profitability.
VRTX Stock Forecast Technical Analysis
In the daily chart of VRTX stock price, the broader market direction is bullish, as the recent quarterly outlook suggested a stable buyer presence in the market. Moreover, the recent descending channel breakout with a bullish daily candle above the 50-day EMA line suggested a confluence bullish factor.
In the daily chart, the 200-day Simple Moving Average is the major support, with upward traction below the 50-day EMA line. Meanwhile, technical indicators showed a long signal, where the 14-day RSI is at the 68.00 level.
Based on this outlook, a bullish continuation is potent as the recent price hovers above the Fixed Range High volume line. However, a minor downside correction is possible towards the 406.93 level, from where a bullish signal may take the price to the 460.00 level.
On the other hand, a deeper downside correction might happen after forming a bearish daily candle below the 390.93 level, which could lower the price toward the 342.39 level.
