All Eyes on Vertex Pharmaceuticals Incorporated 4Q:17 Earnings Show Tonight

Maxim's Jason McCarthy believes Vertex could "unlock" over 90% of the cystic fibrosis market as time passes.


As the first earnings season of the new year carries on, Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) is ready to dole out a fourth quarter outcome after the bell tolls- and Maxim analyst Jason McCarthy is calling this one for the bulls.

Ahead of tonight’s print, the analyst reiterates a Buy rating on VRTX stock with a $195 price target, which implies a 17% upside from current levels. (To watch McCarthy’s track record, click here)

Earlier this month, the VRTX team maintained its 2017 cystic fibrosis (CF) revenue between $2.1 and $2.15 billion, suggesting a 23% rise from 2016 and aligning with the analyst’s expectations. McCarthy underscores that according to the last update on the heels of the third quarter show, Vertex management had set the guide for Kalydeco revenue for 2017 between $810 and $830 million; Orkambi revenue between $1.29 and $1.32 billion; as well as non-GAAP operating expenses between $1.33 and $1.36 billion- all aligning with the analyst’s estimates.

McCarthy’s forecasts soar more bullish than the Street’s expectations: where the analyst looks for $236.7 million in Kalydeco revenue, consensus calls for $230.6 million; the analyst angles for $378.7 million in Orkambi revenue against the Street’s $359.9 million; McCarthy wagers non-GAAP operating expenses will hit $352.4 million against the Street’s call for $356 million; and for non-GAAP EPS, McCarthy predicts VRTX will achieve $0.63, ahead of the Street’s $0.53.

“Vertex expects growth in 2018 to be driven by continued EU reimbursement for Orkambi, Orkambi label expansion to children ages 2-5 and 6-11, as well as Kalydeco label expansion. In addition, tez/iva is expected to be approved in the U.S. soon (PDUFA February 28, 2018) followed by the EU in 2H18,” comments the analyst.

Overall, “Our thesis remains that triple combinations with the tez/iva backbone should position Vertex to unlock 90% or more of the CF market over time. In addition, while the focus on Vertex has been CF and this remains the driver of the company, we are watching the company’s progress as it branches out into gene editing with CRISPR, a space that has garnered a significant amount of investor attention. A P1/2 trial in β-thalassemia is planned in Europe in 2018 and an IND for a trial in sickle cell is expected this year,” McCarthy surmises.

TipRanks highlights a strong bullish consensus betting on this biotech player. All 11 analysts polled in the last 3 months rate a Buy on Vertex stock. With a return potential of 13%, the stock’s consensus target price stands at $188.50.

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