Not all world heavyweight champions are found in the boxing ring. Consider global biotech giant Vertex Pharmaceuticals (NASDAQ:VRTX). This drug maker is one to watch. Just this last June, the company landed #23 on Forbes’ Global Growth Champions List. The big rare disease player is making waves in the biotech universe.
After all, it’s been a good stretch for Vertex investors. The stock has jumped 16% this year. Meanwhile, rival Galapagos NV (NASDAQ:GLPG) recently reported uninspired Phase 2 clinical results in cystic fibrosis. The biotech competitor’s botched clinical performance clears the way for Vertex to solidify its almost monopoly on the cystic fibrosis market.
Near-term competition? Consider the slate cleared- and the market could now be Vertex’s for the taking.
Using TipRanks’ Top-Rated Stocks investor tool, we can see Vertex is one of Wall Street’s most recommended stocks today. Vertex has seen a 19% surge in the last three months alone. Another positive indication: the best-ranked analysts on the Street are backing this biotech bet. Let’s investigate why these top experts are so bullish.
Price Target Boosts, Left and Right
At the start of June, Stifel’s Paul Matteis (Profile & Recommendations) stepped into the role of Managing Director and Senior Analyst, covering the biotech sector for the firm. On Wednesday, the analyst assumed coverage on Vertex with a Buy rating. The analyst sees more room for VRTX shares to run, lifting the price target from $180 to $200 (12% upside potential).
Matteis sees a fierce moat playing to Vertex’s advantage against the competition. A diverse portfolio with pipeline drivers certainly don’t hurt the analyst’s enthusiasm on Vertex’s market opportunity. True, Vertex showcases robust barriers to entry in the cystic fibrosis arena. Yet, Matteis likewise spotlights a pipeline beyond cystic fibrosis suggesting return potential ahead.
BMO analyst Do Kim (Profile & Recommendations) echoes Matteis’ vote of confidence. The bull just got more bullish.
In reaction to “stellar” cystic fibrosis revenues from VRTX in its second quarter print, the analyst reiterated an Outperform rating. Kim also dialed up his price target from $191 to $204 (15% upside potential). Betting on Vertex has turned over 24.8% in average profits for Kim.
The company’s third cystic fibrosis treatment Symdeko proved “strong” in sales. Kim believes, “While Orkambi sales declined, we believe Symdeko is capturing Orkambi switchers as well as naive patients and Orkambi dropouts.”
Vertex management offered a revised revenue outlook Kim calls “likely conservative.” Keep in mind, “Symdeko has more room to expand, and Kalydeco approval in 12- to 24-month-olds (PDUFA August 15),” adds Kim.
Another driver for ‘additional growth’: Symdeko got a green light on Tuesday in two- to five-year-old patients with two copies of the F508del-CFTR mutation. Vertex’s drug is now the first approved medicine to treat the underlying cause of cystic fibrosis in this population.
A Large-Cap Biotech Favorite
Oppenheimer’s Hartaj Singh (Profile & Recommendations) already saw wheels shifting mid-June in the biotech universe, with “large-cap biotech sentiment turning.”
Large-cap biotech picks are looking good to Singh after 1) chatting with investors 2) analyzing trading dynamics, and 3) better fundamentals. And the best part: Singh sees “VRTX leading the charge.”
Vertex holds steadfast as one of Singh’s “favorite large-cap biotech names.”
In reaction to “robust” second quarter results and an “accelerating pipeline,” the analyst celebrated along with the other Wall Street bulls. The analyst reiterated an Outperform rating on the stock while bumping up the price target from $180 to $200 (12% upside potential).
“Our VRTX sales/earnings numbers have been among the highest on the Street, as our pre-launch Symdeko due diligence… had indicated robust pent-up demand for the product,” asserts Singh. The analyst notes a fast kickstart to patient recruitment for triplet therapies in Phase 3 trials VX-659 and VX-445. Moving forward, this biotech player has its eyes on filing an NDA to the FDA by the middle of next year.
With “more patients qualifying for CF drugs in various countries, reimbursement pushback is increasing recently, as in New York, in France and in Ireland over the last year,” the analyst acknowledges. That said, he remains confident as ever: “While these negotiations are fraught, we believe that the strength of the triplet risk/benefit profile will eventually convince reimbursement entities.”
Vertex Goes… Unanimously to the Bulls
Bottom line: this big rare disease player is a “Strong Buy” pick among Wall Street’s best-performing analysts. In the last three months, Vertex has attracted 12 buy recommendations. Not a single top analyst is sidelined or bearish on Vertex’s market opportunity. With a confident return potential of 16%, the stock’s consensus price target stands tall at $204.50. The risk/reward looks enticing for Vertex’s story.
