Vertex Pharmaceutical: Analysts Offer Insight on Business Developments

reported earnings after the bell on Tuesday that beat consensus estimates. Despite the beat, the stock declined in Wednesday's trading action by 3.73 percent. Credit Suisse reiterates neutral rating, $94 price target: “VRTX reported non-GAAP EPS of $(0.61), which was above consensus of $(0.74), but below CSe of $(0.54). Revenues were $138M, which were slightly higher than CSe/consensus of $127M/$129M. Kalydeco sales ($113M) were in line with CSe ($112M), but were slightly below consensus ($117M). Total non-GAAP R&D and SG&A expenses were $180M and $58M respectively.” H.C. WainWright&Co reiterates neutral rating, $85 price target: “Our 12-month price target of $85/share is based on an equally-weighted composite of: (a) $85.81/share, as a 35x multiple of taxed and diluted FY20 GAAP EPS of $8.02 discounted back to FY14 at 20%; and (b) an NPV of $84.90/ share (discount rate 10.5%, terminal growth rate of 2.5%). Risks to our investment thesis and target price include: 1) the failure of ivacaftor, VX-809, VX-661 in further clinical studies; 2) the failure of VX-809 to gain regulatory approval; 3) the failure of VX-809 and ivacaftor to achieve our peak sales revenue; 4) product competition.” Wells Fargo reiterates outperform rating, $108-$112 price target: “Overall, we remain encouraged by the continued progress towards the ‘809/Kalydeco combo filing, Kalydeco monotherapy expansion into new indications, and the company's increasingly proactive business development plans. We believe VRTX's valuation still underappreciates the long-term CF opportunity and the robust R&D platform underpinning the company. Our 2014E non-GAAP EPS loss moves to -$2.10 from -$2.08 and our 2015E non-GAAP EPS loss moves to -$1.57 from -$1.56. We are adjusting our valuation range to$108-112 from $110-114.” JMP Securities reiterates outperform rating, $115 price target: “Based on management commentary, we believe 2014 sales are headed toward the low end of guidance ($470-$500 million), if Australian reimbursement comes to fruition. In addition, Vertex shared results from a Phase 2 study of the Kalydeco and lumacaftor combination in F508del heterozygous patients. As we expected, the study failed to show efficacy and we believe that the addition of a second corrector in combination will be needed to gain efficacy in this population, which is about 25-30% of CF patients.” Vertex Pharmaceutical closed at $92.00 on the Wednesday trading session.