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Will Trikafta Drive Vertex's (VRTX) Revenues in Q4 Earnings?

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We expect Vertex Pharmaceuticals Incorporated (VRTX - Free Report) to surpass expectations when it reports fourth-quarter and full-year 2020 results on Feb 1, after market close.

The company’s earnings surprise record is pretty impressive. It delivered an earnings beat in each of the trailing four quarters, the average being 28.35%. In the last-reported quarter, Vertex delivered an earnings surprise of 10.46%.

Shares of Vertex have lost 3.1% in the past year against the industry’s increase of 16.6%.

price chart for VRTX


Let’s see how things have shaped up for the quarter to be reported.

Factors at Play

Revenue growth in the last-reported quarter was driven by a rapid uptake of the company’s new cystic fibrosis (“CF”) medicine Trikafta– a trend that is most likely to have continued in the fourth quarter.

Notably, in August 2020, the European Commission (“EC”) approved Kaftrio (brand name of Trikafta in Europe). Following the nod from the EC, about 10,000 new patients with one minimal function mutation and one F508del mutation are now eligible to be treated with Kaftrio. The approval in Europe is most likely to have contributed to international revenues in the fourth quarter.

The strong acceptance of Trikafta caused the sales erosion of Vertex’s other CF drugs and its existing combinations, namely Kalydeco, Orkambi and Symdeko/Symkevi. In the last-reported quarter, all the other three CF medicines saw a year-over-year decline in sales, a trend that most likely continued in the to-be-reported quarter as well.

Meanwhile, in December 2020, the FDA approved Trikafta, Symdeko and Kalydeco for additional rare cystic fibrosis transmembrane conductance regulator mutations. These approvals will help to treat additional 600 CF patients.

Please note that the approval of Trikafta/Kaftrio in additional geographies, reimbursement agreements for Kaftrio in EU countries, and approval of all CF medicines for younger patient populations and additional mutations could bring additional revenues for Vertex in the fourth quarter and beyond.

Why a Likely Positive Surprise?

Our proven model predicts an earnings beat for Vertex this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.

Earnings ESP: Vertex has an Earnings ESP of +5.39% as the Zacks Consensus Estimate is pegged at $2.65 while the Most Accurate Estimate is pegged at $2.80.

Zacks Rank: Vertex has a Zacks Rank #2

Other Stocks to Consider

Here are some other drug/biotech stocks worth considering from the same space as our model shows that these too have the right combination of elements to beat on earnings this reporting cycle.

Alexion Pharmaceuticals, Inc. has an Earnings ESP of +12.29% and a Zacks Rank of 2, currently. The company is scheduled to report earnings on Feb 4.

Alkermes plc (ALKS - Free Report) has an Earnings ESP of +21.74% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Gilead Sciences, Inc. (GILD - Free Report) has an Earnings ESP of +3.89% and a Zacks Rank of 3, currently. The company is scheduled to report earnings on Feb 4.

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