Assessing Vertex Pharmaceuticals After FDA Approval of CRISPR Treatment in 2025

So, you’re wondering what to do with Vertex Pharmaceuticals’ stock now that the market’s winds seem to be shifting again. It’s one of those moments when even seasoned investors start questioning if they’re seeing hidden value or chasing last season’s trends. Let’s take a step back and piece together what’s really going on with Vertex right now.

Over the past month, the stock has gained 3.7%, more than making up for last week’s 3.1% drop. Over the long haul, though, Vertex’s performance stands out, with the share price up nearly 40% in three years and a massive 93% over five years, despite a slightly negative 1-year return. These numbers reflect a company navigating the usual market ups and downs but ultimately trending in a positive direction. Investors have re-evaluated risk and growth potential, especially as new treatment pipelines and market competition draw more attention to biotech heavyweights like Vertex.

When you ask if the company is undervalued, you’re not alone. Based on our scorecard, Vertex earns a valuation score of 3 out of 6, meaning it passes half the usual undervaluation checks. That puts it in a gray zone, with evidence of value but also reasons for caution.

In the next section, we’ll break down these valuation approaches one by one to see where Vertex shines and where it might lag, before revealing the single most insightful way to gauge the company’s true worth.

Why Vertex Pharmaceuticals is lagging behind its peers

Approach 1: Vertex Pharmaceuticals Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model works by estimating how much cash Vertex Pharmaceuticals is expected to generate in the future, then bringing those amounts back to today’s dollars. This is done by applying a “discount” to future cash flows, making sure all those projections account for the time value of money and investment risk.

Currently, Vertex reports a Free Cash Flow (FCF) of $3.46 billion. Analyst projections suggest this could nearly double to $6.64 billion by 2029. Estimates for the next five years are based on analyst coverage, while future years are extrapolated. For example, in 2026 analysts predict $4.81 billion in FCF, growing each year as new treatments and expansion opportunities come online.

Based on these inputs, the DCF model calculates an intrinsic fair value of $708.47 per share. Compared to the current market price, that means the stock is trading at a 42.4% discount, which implies it could be significantly undervalued from a long-term cash flow perspective.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Vertex Pharmaceuticals.

Our Discounted Cash Flow (DCF) analysis suggests Vertex Pharmaceuticals is undervalued by 42.4%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Vertex Pharmaceuticals Price vs Earnings

The Price-to-Earnings (PE) ratio is one of the most widely used metrics for valuing profitable companies because it directly relates a company’s stock price to its current earnings. For businesses like Vertex Pharmaceuticals, which consistently earn profits, PE offers a straightforward way to gauge whether the market’s price reflects the company’s actual performance.

Growth expectations and perceived risk play a big role in setting what a “normal” PE ratio should be. Companies with faster expected earnings growth and lower risks typically warrant higher multiples, while those facing uncertainty or limited growth often see lower ratios. In Vertex’s case, the current PE stands at 28.8x. This is higher than the biotech industry’s average of 17.2x but below the 42.0x average for its direct peers.

Simply Wall St has developed the “Fair Ratio,” an advanced benchmark for a company’s ideal PE multiple. Unlike basic averages, the Fair Ratio incorporates Vertex’s specific growth profile, profit margins, market capitalization, and risk factors to recommend a reasonable multiple for today’s environment. For Vertex, the Fair Ratio is assessed at 27.0x, just slightly below where the stock trades now.

Comparing the actual PE of 28.8x to the Fair Ratio of 27.0x shows Vertex is valued close to what its underlying fundamentals suggest. The minimal difference between the two means there are no glaring mispricings at current levels.

Result: ABOUT RIGHT

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Vertex Pharmaceuticals Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is the story you believe about a company. It combines your perspective on future revenue, margins, and earnings with your sense of what the business can achieve and how its story might play out.

Narratives bridge the gap between the company’s story and its financial forecasts, helping you connect all the numbers to a real-world thesis. They are easy to build and compare on Simply Wall St’s Community page, where millions of investors share and update their own Narratives as new information arrives, such as breaking news or fresh earnings reports.

By defining your Narrative, you can estimate what you think a fair value for Vertex is, then instantly see whether the current share price looks attractive or overvalued. And because Narratives update in real time as forecasts change, your decision making stays razor-sharp without extra effort.

For Vertex Pharmaceuticals, one Narrative might set a bullish fair value at $615.66, built on strong growth in gene editing and new markets. Another could argue a more cautious fair value of $330, reflecting risk from competition and possible regulatory headwinds. This shows just how much your view on the story moves the numbers.

Do you think there's more to the story for Vertex Pharmaceuticals? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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