Earnings Update: Here's Why Analysts Just Lifted Their Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) Price Target To US$452

Last week, you might have seen that Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) released its full-year result to the market. The early response was not positive, with shares down 4.0% to US$416 in the past week. Vertex Pharmaceuticals reported in line with analyst predictions, delivering revenues of US$9.9b and statutory earnings per share of US$13.89, suggesting the business is executing well and in line with its plan. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Vertex Pharmaceuticals after the latest results.

Check out our latest analysis for Vertex Pharmaceuticals

After the latest results, the 27 analysts covering Vertex Pharmaceuticals are now predicting revenues of US$10.7b in 2024. If met, this would reflect a solid 8.6% improvement in revenue compared to the last 12 months. Per-share earnings are expected to increase 8.3% to US$15.22. Before this earnings report, the analysts had been forecasting revenues of US$10.6b and earnings per share (EPS) of US$15.39 in 2024. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

With the analysts reconfirming their revenue and earnings forecasts, it's surprising to see that the price target rose 6.0% to US$452. It looks as though they previously had some doubts over whether the business would live up to their expectations. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Vertex Pharmaceuticals at US$578 per share, while the most bearish prices it at US$314. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that Vertex Pharmaceuticals' revenue growth is expected to slow, with the forecast 8.6% annualised growth rate until the end of 2024 being well below the historical 22% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 15% per year. Factoring in the forecast slowdown in growth, it seems obvious that Vertex Pharmaceuticals is also expected to grow slower than other industry participants.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

With that in mind, we wouldn't be too quick to come to a conclusion on Vertex Pharmaceuticals. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Vertex Pharmaceuticals going out to 2026, and you can see them free on our platform here..

You can also see our analysis of Vertex Pharmaceuticals' Board and CEO remuneration and experience, and whether company insiders have been buying stock.

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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.