Why Did Vertex Pharmaceuticals Stock Fall On Tuesday?

On Monday, Vertex Pharmaceuticals Incorporated VRTX reported lower-than-expected first-quarter 2025 earnings.

Vertex reported first-quarter adjusted earnings per share of $4.06, down from $4.76 a year ago, missing the consensus of $4.32.

The cystic fibrosis-focused company reported sales of $2.77 billion, missing the consensus of $2.85 billion.

Total revenue increased by 3%, primarily driven by the continued performance of Trikafta/Kaftrio and an early contribution from the U.S. launch of Alyftrek.

• In the U.S., total revenue increased 9% to $1.66 billion due to continued strong patient demand and higher net realized pricing.
• Outside the U.S., total revenue decreased 5% to $1.11 billion, as strong patient demand in established and newer markets was offset by the expected revenue decline in Russia, where Vertex is experiencing a violation of its intellectual property rights. 

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“Vertex delivered a strong start to 2025 with notable execution across the business as we grow and diversify the revenue base, progress multiple launches and advance the R&D pipeline. We continued to expand our leadership in CF and build global momentum for CASGEVY, and we launched JOURNAVX in moderate-to-severe acute pain,” said Reshma Kewalramani, CEO and President of Vertex. “With multiple programs in pivotal development including povetacicept, which continues to make rapid progress in achieving its potential as a pipeline-in-a-product, and additional programs in early and mid-stage development, Vertex is poised to continue to deliver value for years to come.”

Guidance: Vertex raised the low end of total revenue guidance by $100 million to $11.85 billion-$12 billion from $11.75 billion-$12 billion, compared to the consensus of $11.97 billion.

The guidance also includes an immaterial cost impact from tariffs in 2025 based on currently known tariff rates and regulations.

Vertex has temporarily paused the multiple ascending dose portion of the Phase 1/2 study of VX-522, a nebulized CFTR mRNA therapy, to assess a tolerability issue.

William Blair writes, “While the pause is unfortunate, we believe that the decision to pause the study rather than discontinue it suggests that, beyond the tolerability issue, management is encouraged by the data generated to date given it is open-label.”

Analyst Myles Minter writes, “While there was a slight miss on the top line leading to shares trading off 3% in the aftermarket, management raised the lower end of total revenue guidance, suggesting Street estimates may not have fully encompassed the previously disclosed impacts of an unauthorized Trikafta copy in Russia. We would be buyers on weakness here as the CF franchise still represents one of the most stable long-term growth franchises with a competitive moat in the biotech sector.”

Analyst reactions:

• Leerink Partners downgrades Vertex from Outperform to Market Perform and lowers the price target from $550 to $503.
• Needham reiterates Vertex Pharmaceuticals from Hold to Hold.
• JP Morgan maintains Vertex with an Overweight rating, raising the price target from $512 to $515.

Price Action: VRTX stock closed lower by 9.91% at $450.61 on Tuesday.

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