VRTX Fair Value Estimate
$284.7036.3% overvalued
Blended fair value estimate based on DCF, Graham Number, and earnings-based models.
Vertex Pharmaceuticals Inc
Exchange: NASDAQSector: HealthcareIndustry: Biotechnology
Vertex is a global biotechnology company that invests in scientific innovation to create transformative medicines for people with serious diseases and conditions. The company has approved therapies for cystic fibrosis, sickle cell disease, transfusion-dependent beta thalassemia and acute pain, and it continues to advance clinical and research programs in these areas. Vertex also has a robust clinical pipeline of investigational therapies across a range of modalities in other serious diseases where it has deep insight into causal human biology, including neuropathic pain, APOL1-mediated kidney disease, IgA nephropathy, primary membranous nephropathy, autosomal dominant polycystic kidney disease, type 1 diabetes and myotonic dystrophy type 1. Vertex was founded in 1989 and has its global headquarters in Boston, with international headquarters in London. Additionally, the company has research and development sites and commercial offices in North America, Europe, Australia, Latin America and the Middle East. Vertex is consistently recognized as one of the industry's top places to work, including 15 consecutive years on Science magazine's Top Employers list and one of Fortune’s 100 Best Companies to Work For.
Did you know?
Profit margin of 32.9% — that's well above average.
Current Price
$446.78
+0.64%GoodMoat Value
$284.70
36.3% overvaluedProfile
Valuation (TTM)
Market Cap$113.36B
P/E28.67
EV$110.43B
P/B6.07
Shares Out253.72M
P/Sales9.45
Revenue$12.00B
EV/EBITDA22.32
Vertex Pharmaceuticals Inc (VRTX) Valuation
GoodMoat Analysis
Vertex Pharmaceuticals is a high-quality business trading at a significant premium to its estimated intrinsic value. The current price of $454.97 is 60% above the GoodMoat Target of $284.70, indicating a negative margin of safety. This valuation appears demanding relative to the company's current growth rate.
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From a value investing perspective, Vertex Pharmaceuticals presents a clear dichotomy: a fundamentally strong business at an unfavourable price. The company exhibits strong quality indicators, including a robust 21.2% ROE, a healthy 34.8% operating margin, and a conservative balance sheet with minimal debt. However, the valuation assessment reveals a significant hurdle. The current price of $454.97 is 60% above the GoodMoat Target fair value estimate of $284.70. According to the framework's DCF-based Margin of Safety bands, this represents a deeply negative margin of safety, far outside the 'Favourable' (20–40% undervaluation) or even 'Marginal' (10–20%) ranges. The stock's forward P/E of 29.2x must be contextualized against its 9.5% YoY revenue growth. While the P/E is not extreme, it suggests the market is pricing in significant future growth or durability beyond the current trajectory. The 2.8% Free Cash Flow Yield further indicates the price is high relative to current cash generation. For a value investor seeking a margin of safety, the stock is expensive relative to the calculated intrinsic value, requiring flawless long-term execution to justify the premium. Analysis based on data as of 2024-05-15.
VRTX Valuation Metrics
FCF$3.19B
FCF Growth Rate13.50%
EPS Growth (CAGR)13.50%
WACC10.00%
Fair Value Models
Graham Number, PEG-based, and Earnings-based models
View Fair Value →VRTX Valuation & Fair Value Analysis
Vertex Pharmaceuticals Inc (VRTX) valuation analysis using multiple fair value methodologies. GoodMoat calculates a blended fair value target using discounted cash flow (DCF) analysis, the Graham Number, and earnings-based valuation models.
The GoodMoat Fair Value target for Vertex Pharmaceuticals Inc is $284.70. The current stock price is $446.78, suggesting the stock is 56.9% overvalued.
The price-to-earnings (P/E) ratio is 28.67. Price-to-book ratio is 6.07. Price-to-sales ratio is 9.45. Enterprise value to EBITDA is 22.32. PEG ratio is 0.87.
GoodMoat's valuation models include the Graham Number (based on EPS and book value), an earnings-based model (discounted future EPS), and a PEG-adjusted valuation. The three models are averaged to produce a blended fair value estimate. Use these tools alongside the DCF calculator and reverse DCF to form a comprehensive view of Vertex Pharmaceuticals Inc's intrinsic value.