BTIG Initiates Coverage On Vertex Pharmaceuticals

BTIG initiated coverage on Vertex Pharmaceuticals Incorporated VRTX Monday with a Buy rating and $200 price target.

Analyst Hartaj Singh believed “that [the] current valuation is not indicative of the significant potential for combination Kalydeco/lumacaftor therapy in cystic fibrosis. We are 10-25 percent above FY16-19 consensus sales and 30-40 percent above consensus adjusted EPS.”

Singh claimed there “is 10-15 percent upside to 2016-18 sales from the combination launch in 2015. Kalydeco monotherapy achieved a superlative 80-90 percent penetration in less than 3-years post-launch. We believe that Kalydeco/lumacaftor can achieve 50-75 percent penetration by year 3.”

“Key risks to our thesis are FDA and EMA non-approval based on an unknown safety signal being identified with the pivotal combination trials or a request for more trial data, pushing back approval,” according to Singh.

The $200 price target was based on a 25X terminal multiple to the DCF and 2016 EPS.

Vertex Pharmaceuticals Incorporated closed Monday at $121.03, down 1.66 percent.