VRTX

Vertex’s Pipeline Continues to Advance

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Image Source: TradingView By Brian Nelson, CFA Vertex Pharmaceuticals (VRTX) recently reported mixed fourth quarter 2025 results with revenue exceeding the consensus forecast, but non-GAAP earnings per share of $5.03 coming in a bit light relative to consensus. Total revenue increased 10% in the quarter, to $3.19 billion compared to the fourth quarter of 2024 thanks to “continued performance of cystic fibrosis (CF) therapies and additional growth from diversification into additional disease areas.” In the U.S., total revenue increased 12%, while total revenue increased 5% outside the U.S. GAAP and non-GAAP net income were $1.2 billion and $1.3 billion, respectively, compared to $913 million and $1.0 billion, respectively, for the fourth quarter of 2024. Management had the following to say … Read more

Thinking Slow: 3 Research Blind Spots That Changed the Investment World

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Dear members: — Daniel Kahneman in his text Thinking, Fast and Slow (1) divided the human psyche into two systems. The first system is instinctive and emotional, often set on autopilot, while the second system is slower and more logical, requiring a calculating conscious. Many of the maxims the investment world takes for granted today suffer from conclusions that are made rapidly, almost without thinking, driven by our first system, creating what I call research blind spots. — In World War II, Allied bombing raids were suffering from very high casualty rates. It was estimated that for those pilots that were flying at the beginning of the war, only about 10% survived, a terrible loss rate. Bombing was crucial to the Allied … Read more

Vertex Reports Strong Q2, Trial Setback Punishes Shares

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Image Source: TradingView By Brian Nelson, CFA On August 4, Vertex Pharma (VRTX) reported strong second quarter results with both revenue and non-GAAP earnings per share coming in better than expected. The solid performance, however, was overshadowed by a disappointment in its pipeline for pain management: Vertex announced results from its Phase 2 placebo-controlled dose-ranging study evaluating the safety and efficacy of VX-993, an investigational selective NaV1.8 pain signal inhibitor, in treating acute pain after bunionectomy surgery. Treatment with VX-993 did not result in a statistically significant improvement on the primary endpoint of the time-weighted sum of the pain intensity difference from 0 to 48 hours (SPID48) compared to placebo. VX-993 was generally safe and well-tolerated. Based on these results, … Read more

3 Undervalued Stocks to Consider Buying Now

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Dear readers:   With the markets retracing most of their recent drawdown, we’re taking a victory lap as we didn’t panic, nor should have you. We highlighted our wait-and-see approach amidst the worst of the pullback, and we expect the Magnificent 7 (large cap growth and big cap tech) to continue to propel the markets higher, as they have done.   We’ve been busy rolling valuation models as we finetune our assumptions for a great number of companies under coverage. While doing so, we came across three undervalued stocks that are also included in the simulated newsletter portfolios. We think they’re prime for highlight.   The three stocks are UnitedHealth Group (UNH), Nvidia (NVDA) and Alphabet (GOOG). We spend a lot of time on discounted cash-flow valuation, … Read more

Magnificent 7 Earnings Reports Not Bad Thus Far

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By Brian Nelson, CFA   Shortly after Trump’s Liberation Day, where the President unveiled lofty tariffs on numerous countries, we released our wait-and-see outlook for the equity markets, which thus far has proven to be the right move, with the markets largely recovering from the depths reached in April. The S&P 500 (SPY), for example, is down just 3.3% year-to-date, excluding dividends.   A lot has happened since Liberation Day, including easing of tariffs to a 10% baseline for most, if not all, countries, with the key exception of China, where tariffs remain extremely elevated and prohibitive. Many countries are now reportedly negotiating trade agreements with the White House, and we expect China to be added to that list soon, even if … Read more

Vertex Raises Bottom End of 2025 Revenue Guidance Range

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Image Source: Vertex Pharma By Brian Nelson, CFA Vertex Pharmaceuticals (VRTX) reported mixed first quarter results on May 5, with revenue and non-GAAP earnings per share coming in lower than forecast, but the company raised the low end of its revenue guidance range for 2025. Total revenue increased 3% compared to the first quarter of 2024 thanks to continued performance of TRIKAFTA/KAFTRIO and an early contribution from the U.S. launch of ALYFTREK. U.S. total revenue increased 9%, while non-U.S. revenue fell 5% due in part to a violation of its intellectual property rights in Russia, of which it notes to be a “limited and isolated matter.” Management had the following to say about the quarter: Vertex delivered a strong start … Read more

Trump Tariffs Higher than Expected; What We’re Doing

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By Brian Nelson, CFA The Trump tariff increases came in larger than what we were expecting, and it remains to be seen how they will flow through the global economy, as we monitor potential retaliatory tariffs from other countries. As it relates to the equity markets, we’re taking a wait and see approach at the moment as we monitor new policy changes related to trade, immigration, fiscal (tax), and regulations. In short, we’re not overreacting to the sell off as we won’t have a great handle on the tariff impact to companies for a few quarters when they report results post-tariff increases. That said, we’re expecting continued market volatility, with meaningful risk to the downside, before trade uncertainty alleviates in … Read more

Vertex Pharma Is One of Our Favorite Biotechs

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Image: Vertex Pharma has performed quite well since the beginning of 2023. By Brian Nelson, CFA Vertex Pharma (VRTX) reported mixed fourth quarter results February 10 with revenue outpacing the consensus forecast, but non-GAAP earnings per share coming in a bit light relative to expectations. In the quarter, product revenue increased 16% thanks to the continued performance of TRIKAFTA/KAFTRIO. In the U.S., net product revenue increased 17%, while net product revenue outside the U.S. increased 14%. GAAP and non-GAAP net income in the quarter came in at $913 million and $1.0 billion, respectively, lower than the $969 million and $1.1 billion, respectively, for the fourth quarter of 2023. Management had the following to say about the quarter in the press … Read more

Shares of UnitedHealth Group and Vertex Pharma Sour

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Image Source: Rodrigo Senna cc by 2.0. By Brian Nelson, CFA Over the past few weeks, UnitedHealth Group (UNH) has faced a plethora of negativity. First, UnitedHealthcare CEO was shot and killed – not UnitedHealth Group’s CEO Andrew Witty – but the CEO of its health benefits unit. The killing happened right before UnitedHealth’s plans for its annual Investor Day. The event sparked social media outrage against U.S. health insurers. There has also been new legislation introduced to potentially break up pharmacy benefit managers. President-elect Donald Trump has also made statements to the effect of breaking up the middlemen in reference to the pharmacy benefit managers. As of right now, we continue to monitor the situation, but the risks have substantially … Read more

Cash-Rich Vertex Pharma Raises 2024 Product Revenue Guidance

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Image: Vertex Pharma’s shares have done quite well the past couple years. By Brian Nelson, CFA Vertex Pharma (VRTX) reported better than expected third quarter results November 4 with revenue and non-GAAP earnings per share coming in ahead of the consensus forecasts. Product revenue advanced 12% in the quarter on a year-over-year basis thanks to strong performance of its cystic fibrosis (CF) therapy TRIKAFTA/KAFTRIA. GAAP and non-GAAP net income were $1.0 billion and $1.1 billion, respectively, for both the third quarter of 2024 and the third quarter of 2023. Management was upbeat with its commentary in the press release: The third quarter marked another period of strong progress, with continued revenue growth and outstanding execution across the business, and we … Read more