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Vertex Pharmaceuticals Stock Downgraded (VRTX)

NEW YORK ( TheStreet) -- Vertex Pharmaceuticals (Nasdaq: VRTX) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity and reasonable valuation levels. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.

Highlights from the ratings report include:

  • VRTX's very impressive revenue growth greatly exceeded the industry average of 8.1%. Since the same quarter one year prior, revenues leaped by 265.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • 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.
  • 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 62.7% when compared to the same quarter one year prior, rising from -$174.07 million to -$64.93 million.
  • In its most recent trading session, VRTX has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.

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 34, below the average drugs industry P/E ratio of 36 and above the S&P 500 P/E ratio of 17.7. Vertex has a market cap of $10.41 billion and is part of the health care sector and drugs industry. Shares are up 50.4% year to date as of the close of trading on Tuesday.

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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