UPDATE: JP Morgan Raises PT to $86 and Reiterates Overweight Rating on Vertex Pharmaceuticals on Phase 3 Trials

JP Morgan analyst Geoff Meacham published a report on Vertex Pharmaceuticals

that reiterated its Overweight rating and raised the price target from $82 to $86. JP Morgan reported that, “Vertex's phase 3 strategy in F508del cystic fibrosis (CF) patients was recently communicated with two trials, TRAFFIC and TRANSPORT, launching soon. Surrounding this development, we spoke with a number of physicians and CFspecific researchers, as well as reviewed the literature. We came away more confident in the probability of success in phase 3, based on our feedback, and on an updated SOTP analysis and sensitivity for the value of the VX-809 combo in this population. Physicians we spoke to had a positive bias toward TRAFFIC / TRANSPORT, noting a +2-4% change in FEV1 would be “clinically meaningful” and would position the VX-809 / Kalydeco combo as a widely held standard of care. Given this diligence, we are more confident in a positive outcome in phase 3 and are raising our VX-809 estimates. From a valuation perspective, our VX-809 scenario analysis suggests a favorable risk/reward with an aggregate total NPV ranging from $63-118/share. As such, we are raising our YE13 PT to $86 from $82 and reiterating our Overweight rating on VRTX shares. We will have much more detail on our call (with slides) at 9 am ET TODAY: 888-889-1309 (US); +1-773-756-0161 (OUS); Passcode: BIOTECH.” Shares of Vertex Pharmaceuticals closed at $51.37 on Monday