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What's in Store for Vertex (VRTX) This Earnings Season?

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Vertex Pharmaceuticals (VRTX - Free Report) is scheduled to report first-quarter 2021 results on Apr 29, after market close.

The company’s earnings surprise record is mixed. It delivered an earnings beat in three of the trailing four quarters and missed the same once, the average being 16.90%. In the last reported quarter, Vertex delivered a negative earnings surprise of 5.28%.

Shares of Vertex have lost 7.8% so far this year compared with the industry’s decline of 1.4%.

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 newest cystic fibrosis (“CF”) medicine Trikafta, a trend most likely to have continued in the first 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 an additional 600 CF patients. These approvals are likely to have boosted sales.

Notably, in November 2020, the European Commission (“EC”) approved the label expansion of Symkevi in combination with Kalydeco for treating certain CF patients in the age group of six to eleven. Moreover, the EC also approved a label expansion of Kalydeco for treating infants (four months or older) with CF. These approvals in Europe are most likely to have contributed to international revenues in the first quarter.

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 first quarter and beyond.

Meanwhile, Vertex is developing treatment candidates developed using gene-editing/mRNA/cell therapy targeting different indications including CF, thalassemia, sickle cell disease and diabetes.

Investors will like to know the progress of the company with its pipeline candidates on its first-quarter earnings call.

Earnings Whispers

Our proven model does not conclusively predict 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 a positive surprise. But that is not the case here as discussed below.

Earnings ESP: Vertex has an Earnings ESP of +0.48% as the Most Accurate Estimate currently stands at $2.78 per share while the Zacks Consensus Estimate is pegged at $2.77 per share. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.

Zacks Rank: Vertex has a Zacks Rank #4 (Sell).

Stocks to Consider

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

BioNTech SE (BNTX - Free Report) has an Earnings ESP of +22.67% and a Zacks Rank #3, currently.

Incyte Corporation (INCY - Free Report) has an Earnings ESP of +8.48% 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 +6.00% and a Zacks Rank of 3, currently.

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