A Decade Of Sales Growth Lies Ahead For Vertex Pharmaceuticals

Following strong Phase I and II data on Tuesday from three different triple combo regimens for cystic fibrosis, shares of Vertex Pharmaceuticals Incorporated VRTX rocketed 30 percent Wednesday to $162.07.

The stock’s climb to a new all-time high was assisted by a string of analyst rating upgrades and price target increases.

Cowen’s Phil Nadeau said in a note that the results clear a “10 year path of revenue growth for [Vertex].” The analyst upgraded the stock to Outperform from Market-Perform and raised its price target from $105 to $200.

Nadeau estimates that by 2025, over 53,000 cystic fibrosis patients will be on one of Vertex’s treatments, driving $10 billion in sales compared to a previously estimated $6.4 billion.

See Also: More Than 30% Upside Seen For Vertex Stock On The Heels Of Phase 2 Data

New Growth Assumptions

Citigroup analyst Robyn Karnauskas reiterated a Buy rating on Vertex with a price target raised from $135 to $190. He also raised his sales forecasts through 2019, placing them well above the Street’s consensus.

Karnauskas’ based his new projections and price target are based on five assumptions, similar to Nadeau’s and other analysts’ new expectations:

• A probability of triple combo therapy in het-min cystic fibrosis patients from 50 percent to 100 percent.
• A lowered discount rate from 9.5 percent to 9 percent, thanks to the program being now de-risked.
• Increased switching from doublet to triplet therapy from 90 percent to 100 percent.
• 79 percent of cystic fibrosis patients worldwide will be on Vertex therapies.
• The launch ramp will peak in five years, not the previously estimated three years.

Investors should watch out for Phase II study results in the first half of 2018, earlier-than-expected VX-152 dose escalation study data and feedback from the FDA on regulatory strategy.

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