We expect Vertex Pharmaceuticals Incorporated (VRTX - Free Report) to surpass expectations when the company reports fourth-quarter and full-year 2021 results on Jan 26, after the market closes.
Vertex surpassed expectations in three of the trailing four quarters while missed on another occasion, with the average earnings surprise being 8%. In the last reported quarter, the company delivered an earnings surprise of 14.1%.
In the trailing 12 months, shares of Vertex Pharmaceuticals have fallen 5.5% compared with the industry’s 40.5% decline.
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Let’s see how things are shaping up for the quarter to be reported.
Factors to Consider
Revenue growth in the third quarter was driven by a rapid uptake of Vertex’s newest cystic fibrosis (“CF”) medicine, Trikafta/Kaftrio (Trikafta’s brand name in Europe). This is most likely to have continued in the fourth quarter as well.
A high level of treatment penetration including rapid uptake in pediatric patients (6-11 years of age) is likely to have driven Trikafta sales in the United States in the fourth quarter, while a solid launch of Kaftrio in Europe may have pushed international revenues of the drug.
Higher sales of Trikafta are likely to have caused sales erosion of Vertex’s other CF drugs and existing combinations, namely Kalydeco, Orkambi as well as Symdeko/Symkevi. Earlier this month, Vertex received label expansion in the European Union for Kaftrio as a treatment for CF in patients aged 6-11 years.
Meanwhile, investors expect an update on Vertex’s non-CF pipeline on the fourth-quarter conference call. The company has a rapidly advancing early-stage portfolio in additional diseases beyond CF like pain, sickle cell disease, thalassemia, APOL1-mediated kidney diseases and diabetes. Several candidates are being developed to treat these indications using different mechanisms such as gene-editing, mRNA and cell therapy.
Last month, Vertex announced positive data from a phase II study evaluating VX-147 in APOL1-mediated focal segmental glomerulosclerosis (FSGS), a severe kidney disorder. Data from the study showed that VX-147 can cause a reduction in proteinuria in patients with APOL1-mediated kidney disease. Vertex plans to push VX-147 into pivotal studies for APOL1-mediated kidney disease including FSGS in the first quarter of 2022.
Our proven model predicts 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. Fortunately, that is 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: The company has an Earnings ESP of +4.98% as the Most Accurate Estimate of $3.49 per share is higher than the Zacks Consensus Estimate of $3.32.
Zacks Rank: Vertex has a Zacks Rank #2.
Other Stocks to Consider
Here are a few other stocks you may want to consider as our model shows that these too have the right combination of elements to beat on earnings this reporting cycle.
Cara Therapeutics (CARA - Free Report) has an Earnings ESP of +5.24% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Cara Therapeutics topped earnings estimates in three of the last four quarters, delivering a surprise of 126.9%, on average.
Dynavax Technologies (DVAX - Free Report) has an Earnings ESP of +3.13% and a Zacks Rank #2.
Shares of Dynavax have skyrocketed 96.3% in the past year. Earnings of Dynavax topped estimates in each of the last four quarters, with the average being 90.4%.
Gilead Sciences (GILD - Free Report) has an Earnings ESP of +3.63% and a Zacks Rank #3.
Shares of Gilead have risen 0.5% in the past year. Earnings of Gilead topped estimates in each of the last four quarters, with an average of 15.8%.
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