Vertex Pharmaceuticals Incorporated Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions

Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) just released its latest first-quarter results and things are looking bullish. Vertex Pharmaceuticals beat earnings, with revenues hitting US$2.7b, ahead of expectations, and statutory earnings per share outperforming analyst reckonings by a solid 14%. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for Vertex Pharmaceuticals

After the latest results, the 30 analysts covering Vertex Pharmaceuticals are now predicting revenues of US$10.8b in 2024. If met, this would reflect a credible 5.6% improvement in revenue compared to the last 12 months. Statutory per-share earnings are expected to be US$15.31, roughly flat on the last 12 months. Before this earnings report, the analysts had been forecasting revenues of US$10.7b and earnings per share (EPS) of US$14.90 in 2024. So the consensus seems to have become somewhat more optimistic on Vertex Pharmaceuticals' earnings potential following these results.

The consensus price target was unchanged at US$462, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. 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. There are some variant perceptions on Vertex Pharmaceuticals, with the most bullish analyst valuing it at US$577 and the most bearish at US$325 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that Vertex Pharmaceuticals' revenue growth is expected to slow, with the forecast 7.5% annualised growth rate until the end of 2024 being well below the historical 21% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 18% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Vertex Pharmaceuticals.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Vertex Pharmaceuticals' earnings potential next year. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. The consensus price target held steady at US$462, with the latest estimates not enough to have an impact on their price targets.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Vertex Pharmaceuticals analysts - going out to 2026, and you can see them free on our platform here.

We also provide an overview of the Vertex Pharmaceuticals Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.

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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.