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Vertex (VRTX) to Report Q2 Earnings: What's in the Cards?

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

The company’s earnings surprise record is mixed. It delivered earnings beat in three of the trailing four quarters and missed the same once, delivering an earnings surprise of 8.83%, on average. In the last-reported quarter, Vertex delivered an earnings beat of 7.58%.

Shares of Vertex have lost 15.2% so far this year compared with the industry’s decline of 1.3%.

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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 second quarter as well.

In June 2021, the FDA approved Trikafta to treat CF in children aged six to 11 years who have at least one F508del mutation in the cystic fibrosis transmembrane conductance regulator (“CFTR”) gene or a mutation in the CFTR gene that is responsive based on in vitro data. Label expansion of the drug is likely to have boosted sales in the to-be-reported quarter.

Vertex also plans to submit the label expansion filing for Trikafta/Kaftrio in several other countries as well.

Trikafta/ Kaftrio has seen substantial uptake across all European countries where the company secured reimbursement agreements, most importantly in the large markets of Germany and the United Kingdom. Additional reimbursement approvals of Kaftrio in EU countries could bring additional revenues in 2021 and beyond.

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, the other three CF medicines saw year-over-year declines in sales, a trend that most likely continued in the to-be-reported quarter as well.

Vertex is also developing several candidates using gene-editing/mRNA/cell therapy targeting different indications other than CF like thalassemia, sickle cell disease and diabetes. Investors will be keen to get an update on the progress of these candidates during the second-quarter earnings call.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for Vertex this time around. 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. Unfortunately, that is not the case here as you will see below. 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 -3.43% as the Most Accurate Estimate currently stands at $2.60 per share while the Zacks Consensus Estimate is pegged at $2.69 per share.

Zacks Rank: Vertex has a Zacks Rank #2 (Buy).

Stocks to Consider

Here are a few stocks you may want to consider as our model shows that these have the right combination of elements to beat on earnings this reporting cycle:

Sarepta Therapeutics, Inc. (SRPT - Free Report) has an Earnings ESP of +25.10% and carries a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Aptose Biosciences Inc. (APTO - Free Report) has an Earnings ESP of +12.73% and carries a Zacks Rank #3, currently. The company is scheduled to report earnings on Aug 3.

Illumina, Inc. (ILMN - Free Report) has an Earnings ESP of +2.36% and carries a Zacks Rank #2 at present. The company is scheduled to report earnings on Aug 5.