We expect Vertex Pharmaceuticals Incorporated VRTX to beat on earnings when it reports fourth-quarter 2019 and full-year results on Jan 30, 2020, after the market closes.
Vertex boasts an excellent earnings surprise history, surpassing expectations in each of the trailing four quarters, the average being 17.59%. In the last reported quarter, the company delivered a positive surprise of 7.89%.
Shares of Vertex have rallied 22% in the past year versus the industry’s 5.1% decrease.
Let’s see, how things are shaping up for the quarter to be reported.
Factors at Play
Vertex’s cystic fibrosis (CF) drug portfolio has been performing well. Sales growth in the last reported quarter was driven by a rapid uptake of the company’s newest CF medicine Symdeko, a trend that most likely continued in the fourth quarter. The drug, a combination of tezacaftor and ivacaftor, has seen solid demand since its launch in 2018 as more patients are resorting to treatment with the same.
In June 2019, the FDA approved Symdeko to treat children (aged from six to 11 years) affected by CF with certain mutations in the CFTR gene. This label expansion reflected on incremental sales in the last reported quarter, a trend that most likely continued in the fourth quarter as well.
Meanwhile, Vertex’s other two CF medicines Kalydeco (ivacaftor) and Orkambi are expected to have contributed to the company’s top line in the to-be-reported quarter.
In the quarter to be reported, Vertex gained a reimbursement approval in England for Orkambi and Symkevi and in France for Orkambi. The reimbursement nods are expected to have driven Vertex’s revenues from ex-U.S. markets in the soon to-be-reported quarter.
In October 2019, the FDA approved Vertex’s triple combination regimen Trikafta (elexacaftor/tezacaftor/ivacaftor and ivacaftor) for the treatment of CF in patients aged 12 years and older, who have at least one copy of the F508del mutation in their CFTR gene. The approval of Trikafta, which can treat about 90% of total CF patients, came five months before the scheduled PDUFA date in March 2020.
A regulatory application in the EU seeking approval of elexacaftor/tezacaftor/ivacaftor combination regimen was validated by the European Medicines Agency (EMA) on Oct 31, 2019.
We expect management to provide a thorough update on this recent nod and discuss the launch activities for Trikafta during the upcoming investors’ call.
Meanwhile, in November 2019, Vertex and partner CRISPR Therapeutics CRSP announced positive preliminary safety and efficacy data from the ongoing phase I/II studies evaluating their CRISPR/Cas9 gene-editing therapy, CTX001, for two severe blood disorders, namely sickle cell disease (SCD) and adult transfusion-dependent b-thalassemia (TDT).
Vertex believes that the interim data from the above-mentioned study demonstrated meaningful benefits from CTX001 for patients following a one-time intervention. Investors will be keen to get the latest details on the same during fourth-quarter earnings call.
Last month, the European Commission granted marketing authorization to Kalydeco for its expanded use in infants aged from six to less than 12 months with at least one of specified nine mutations in the CFTR gene. Though this label expansion nod is unlikely to have driven Kalydeco sales in the fourth quarter, we expect the same to have contributed to the company’s top line in future quarters.
Our proven model predicts an earnings beat for Vertex this season because it has the right combination of the two key ingredients: a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for a likely positive surprise.
Earnings ESP: Vertex has an Earnings ESP of +14.07%, representing the difference between the Most Accurate Estimate of $1.37 and the Zacks Consensus Estimate of $1.20. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Vertex currently has a Zacks Rank #3.
Vertex Pharmaceuticals Incorporated Price and EPS Surprise
Other Stocks to Consider
Here are some other large drug/biotech stocks that have the perfect mix of elements to also beat on earnings this time around:
Regeneron Pharmaceuticals REGN has an Earnings ESP of +3.50% and a Zacks Rank of 3. The company is scheduled to release earnings results on Feb 6. You can see the complete list of today’s Zacks #1 Rank stocks here.
Alexion Pharmaceuticals, Inc. ALXN has an Earnings ESP of +5.97% and a Zacks Rank #2. The company is scheduled to release earnings results on Jan 30.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.