A month has gone by since the last earnings report for Vertex Pharmaceuticals (VRTX Quick QuoteVRTX - Free Report) . Shares have added about 8.4% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Vertex due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Q2 Earnings & Sales Beat Estimates, 2021 Guidance Up

Vertex reported third-quarter 2021 adjusted earnings per share of $3.56, which beat the Zacks Consensus Estimate of $3.12. Earnings rose 35% year over year. Strong cystic fibrosis product revenues led to higher earnings.

Revenues of $1.98 billion, which surpassed the Zacks Consensus Estimate of $1.85 billion, comprised fully of CF product revenues. Total product revenues rose 29% year over year, primarily driven by higher sales of Trikafta (marketed as Kaftrio in Europe).

CF Franchise Sales Rise

Trikafta generated sales worth $1.6 billion, up 62% year over year. Sales rose 13% to $1.38 billion in the United States driven by a high level of treatment penetration including rapid uptake in pediatric patients (6-11 years of age). Sales surged 92% year over year to $601 million outside the United States driven by strong launches of Kaftrio in Europe

Vertex has now secured reimbursement agreements for Kaftrio in more than 20 countries, including Canada, France and Italy.
 
Symdeko/Symkevi registered sales of $81 million for the quarter, down 48.1% year over year.

Kalydeco recorded sales of $162 million for the quarter, reflecting a 16.5% decrease year over year. Orkambi generated sales of $185 million for the reported quarter, down 18.1% from the prior-year quarter. Sales of Kalydeco, Symdeko/ Symkevi and Orkambi were hurt by patients switching to Trikafta.

Costs Rise

Adjusted operating income rose 39% year over year to $1.19 billion for the quarter, driven by higher revenues and cost control

Adjusted research and development (R&D) expenses rose 15.1% from the year-ago quarter to $403 million due to the expansion of the CF and non-CF pipeline.

Adjusted selling, general and administrative (SG&A) expenses increased 7.5% to $158 million in the reported quarter due to investments made to support launches of its CF medicines.

2021 Guidance

Vertex raised its product revenue guidance for 2021 owing to strong year-to-date performance and also the rapid uptake of Kaftrio in new countries like France and Italy along with approval for younger age groups in the United States.

The company now expects revenues from CF products in the range of $7.4-$7.5 billion compared with the previous expectation of $7.2-$7.4 billion. The midpoint of the guidance reflects approximately 20% growth from the previous projection.

Combined adjusted R&D and SG&A expenses for 2021 are expected in the band of $2.25-$2.30 billion, unchanged from the previous guidance. Adjusted tax rate is expected in the range of 21-22%, unchanged from the previous guidance.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision.

VGM Scores

Currently, Vertex has a strong Growth Score of A, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Vertex has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.