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Why Is Vertex (VRTX) Down 6% Since Last Earnings Report?
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A month has gone by since the last earnings report for Vertex Pharmaceuticals (VRTX - Free Report) . Shares have lost about 6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Vertex due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Q1 Earnings & Sales Beat
Vertex reported adjusted earnings per share (EPS) of $3.05 in first-quarter 2023, beating the Zacks Consensus Estimate and our model estimate of $2.95 and $2.92, respectively. The adjusted EPS fell 13% year over year, on account of higher research and development expenses incurred during the quarter, which was partially offset by strong growth in product revenues.
The company reported total revenues of $2.37 billion, comprising fully of CF product revenues. The figure surpassed the Zacks Consensus Estimate and our model estimates of $2.31 billion and $2.29 billion, respectively. Total revenues rose 13% year over year, primarily driven by higher international sales of Trikafta/Kaftrio.
Quarter in Detail
The company markets four CF products — Trikafta/Kaftrio, Symdeko (marketed as Symkevi in Europe), Orkambi and Kalydeco.
CF product sales rose 3% year over year in the United States to $1.40 billion, while sales outside the United States surged 33% to $971.0 million.
Trikafta generated sales worth $2.10 billion, up 19% year over year, driven by the strong uptake in international markets and additional patients starting treatment with Trikafta, most notably pediatric patients (6-11 years of age) in the United States. Trikafta sales beat our model estimate of $2.04 billion.
Sales from other CF products, namely Symdeko/Symkevi, Kalydeco and Orkambi, were down 17.2% year over year to $278.1 million. Sales of these drugs were hurt by patients switching to Trikafta.
Costs Rise
Adjusted research and development (R&D) expenses rose 28.1% from the year-ago quarter’s levels to $663.5 million due to the expansion of the company’s mid- and late-stage pipeline.
Adjusted selling, general and administrative (SG&A) expenses increased 17.6% to $196.9 million in the reported quarter, due to expenses for CF launches and pre-commercial activities for exa-cel.
During the fourth quarter, Vertex recorded acquired IPR&D costs of $347.1 million compared with $2.0 million in the year-ago quarter.
2023 Guidance
The company reiterated its 2023 guidance. Management expects total revenues from CF products in the range of $9.55-$9.70 billion for 2023, suggesting a 7-9% year-over-year growth.
For the full year, management expects to record adjusted combined R&D, Acquired IPR&D and SG&A expenses in the band of $3.9-$4.0 billion. The adjusted tax rate is expected in the range of 21-22%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
The consensus estimate has shifted 11.14% due to these changes.
VGM Scores
At this time, Vertex has an average Growth Score of C, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been 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.
Performance of an Industry Player
Vertex is part of the Zacks Medical - Biomedical and Genetics industry. Over the past month, Alkermes (ALKS - Free Report) , a stock from the same industry, has gained 2.4%. The company reported its results for the quarter ended March 2023 more than a month ago.
Alkermes reported revenues of $287.6 million in the last reported quarter, representing a year-over-year change of +3.3%. EPS of $0.01 for the same period compares with $0.12 a year ago.
For the current quarter, Alkermes is expected to post earnings of $0.16 per share, indicating a change of +166.7% from the year-ago quarter. The Zacks Consensus Estimate has changed +72.1% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Alkermes. Also, the stock has a VGM Score of D.
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Why Is Vertex (VRTX) Down 6% Since Last Earnings Report?
A month has gone by since the last earnings report for Vertex Pharmaceuticals (VRTX - Free Report) . Shares have lost about 6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Vertex due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Q1 Earnings & Sales Beat
Vertex reported adjusted earnings per share (EPS) of $3.05 in first-quarter 2023, beating the Zacks Consensus Estimate and our model estimate of $2.95 and $2.92, respectively. The adjusted EPS fell 13% year over year, on account of higher research and development expenses incurred during the quarter, which was partially offset by strong growth in product revenues.
The company reported total revenues of $2.37 billion, comprising fully of CF product revenues. The figure surpassed the Zacks Consensus Estimate and our model estimates of $2.31 billion and $2.29 billion, respectively. Total revenues rose 13% year over year, primarily driven by higher international sales of Trikafta/Kaftrio.
Quarter in Detail
The company markets four CF products — Trikafta/Kaftrio, Symdeko (marketed as Symkevi in Europe), Orkambi and Kalydeco.
CF product sales rose 3% year over year in the United States to $1.40 billion, while sales outside the United States surged 33% to $971.0 million.
Trikafta generated sales worth $2.10 billion, up 19% year over year, driven by the strong uptake in international markets and additional patients starting treatment with Trikafta, most notably pediatric patients (6-11 years of age) in the United States. Trikafta sales beat our model estimate of $2.04 billion.
Sales from other CF products, namely Symdeko/Symkevi, Kalydeco and Orkambi, were down 17.2% year over year to $278.1 million. Sales of these drugs were hurt by patients switching to Trikafta.
Costs Rise
Adjusted research and development (R&D) expenses rose 28.1% from the year-ago quarter’s levels to $663.5 million due to the expansion of the company’s mid- and late-stage pipeline.
Adjusted selling, general and administrative (SG&A) expenses increased 17.6% to $196.9 million in the reported quarter, due to expenses for CF launches and pre-commercial activities for exa-cel.
During the fourth quarter, Vertex recorded acquired IPR&D costs of $347.1 million compared with $2.0 million in the year-ago quarter.
2023 Guidance
The company reiterated its 2023 guidance. Management expects total revenues from CF products in the range of $9.55-$9.70 billion for 2023, suggesting a 7-9% year-over-year growth.
For the full year, management expects to record adjusted combined R&D, Acquired IPR&D and SG&A expenses in the band of $3.9-$4.0 billion. The adjusted tax rate is expected in the range of 21-22%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
The consensus estimate has shifted 11.14% due to these changes.
VGM Scores
At this time, Vertex has an average Growth Score of C, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been 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.
Performance of an Industry Player
Vertex is part of the Zacks Medical - Biomedical and Genetics industry. Over the past month, Alkermes (ALKS - Free Report) , a stock from the same industry, has gained 2.4%. The company reported its results for the quarter ended March 2023 more than a month ago.
Alkermes reported revenues of $287.6 million in the last reported quarter, representing a year-over-year change of +3.3%. EPS of $0.01 for the same period compares with $0.12 a year ago.
For the current quarter, Alkermes is expected to post earnings of $0.16 per share, indicating a change of +166.7% from the year-ago quarter. The Zacks Consensus Estimate has changed +72.1% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Alkermes. Also, the stock has a VGM Score of D.