Vertex Pharmaceuticals Stock Buy Recommendation Reiterated (VRTX)

NEW YORK (TheStreet) -- Vertex Pharmaceuticals (Nasdaq:VRTX) has been reiterated by TheStreet Ratings as a buy with a ratings score of B. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, impressive record of earnings per share growth and compelling growth in net income. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.

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Highlights from the ratings report include:

• VRTX's very impressive revenue growth greatly exceeded the industry average of 3.6%. Since the same quarter one year prior, revenues leaped by 495.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
• The current debt-to-equity ratio, 0.53, is low and is below the industry average, implying that there has been successful management of debt levels. Along with this, the company maintains a quick ratio of 3.56, which clearly demonstrates the ability to cover short-term cash needs.
• The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Biotechnology industry and the overall market, VERTEX PHARMACEUTICALS INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
• VERTEX PHARMACEUTICALS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, VERTEX PHARMACEUTICALS INC turned its bottom line around by earning $0.04 versus -$3.77 in the prior year. This year, the market expects an improvement in earnings ($2.59 versus $0.04).
• The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Biotechnology industry. The net income increased by 152.0% when compared to the same quarter one year prior, rising from -$176.10 million to $91.59 million.

Vertex Pharmaceuticals Incorporated engages in discovering, developing, manufacturing, and commercializing small molecule drugs for the treatment of serious diseases worldwide. The company has a P/E ratio of 42.1, below the average drugs industry P/E ratio of 44.6and above the S&P 500 P/E ratio of 17.7. Vertex has a market cap of $12.9 billion and is part of the health care sector and drugs industry. Shares are up 54.1% year to date as of the close of trading on Thursday.

You can view the full Vertex Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

 

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