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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
Vertex Pharmaceuticals Incorporated (XNAS:VRTX) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
VRTX
Name:
VERTEX PHARMACEUTICALS INCORPORATED (XNAS:VRTX)
Sector:
892.60M
Industry:
Biotechnology
CEO:
Dr. Jeffrey Leiden
Total Employees:
3,900
Our Technological Advancement Rating
Our Rating:
D
Technological advancement compared to industry is -149.06% lower
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF VERTEX PHARMACEUTICALS INCORPORATED(VRTX) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND BIOTECHNOLOGY INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
281.04
One Month Price Target:
$281.75
Six Month Price Target :
$285.32
Likely Price in One Year's Time:
Ticker:
$289.6
Likely Trading Range Today Under (Normal Volatility)
$280.14
Price Upper limit ($) :
$282.28
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$268.25
This week:
$252.43
This month :
$223.82
Other Primary facts
Market Cap:
71.60B
Market Cap Classification:
Large Cap
Number of Shares
IPO Date:
256.46M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
10.35%
-20.7%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$340.39
$313.02
$221.69
$249.06
Medium risk (<10%) entry points
Buy Call
Sell Call
$304.11
Buy Put:
Sell Put:
$298.27
$257.89
$263.81
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
VRTX
Sharpe Ratio:
2.34%
Comparison:
VRTX, is amongst the top 40% stocks with highest risk-adjusted returns
Sharpe ratio is 20.20% higher than the industry
& ratio is 2.54% higher than the market/S&P 500 average
Average Returns/Yield of
VRTX
Daily returns:
0.06%
Weekly returns:
0.31%
Monthly returns:
1.23%
Yearly returns:
25.22%
Comparison of returns:
Average annual returns/yield (last 3 years) is -41.62% below industry average
Classification:
VRTX, is amongst the top 40% highest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.99
Statistical test of Returns:
VRTX has not yielded statistically significant higher returns when compared to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
2.25%
Weekly Volatility:
5.02%
Monthly Volatility:
10.05%
Yearly Volatility:
34.81%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
2.51%
Volatility in last five trading days has been 11.90% above long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-4.55%
Weekly VaR:
-10.18%
Monthly VaR:
-20.36%
How Much Can the price of
VRTX
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-17%
Worst case (decline):
-70.53%
This translates to price declining to:
$232.42
This translates to price declining to:
$82.82
Severe Crash Probability
Risk of crash in next 6/12 months: High (50-70%)
What is Value at Risk (VaR)?
Risk Fundamentals
VRTX is a 43.70% riskier investment compared to the market/S&P 500 & is 23.11% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is -52.74% below industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
VRTX
Beta in relation to market/S&P 500--0.45
Expected beta in 1 year's time:
0.603
Expected beta in 3 year's time:
0.853
Unlevered (debt free) Beta:
0.424
Beta in relation to Nasdaq (XNAS):
0.653
Beta in relation to all global stocks::
0.684
Beta Comparison & Analysis
Beta of competitors/peers::
0.812
Beta is -44.22% lower than peers
Average Industry Beta:
1.152
Beta is -60.65% below industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
24.78%
Sustainable growth rate is -52.75% below industry average
Alpha provided | Alpha Analysis
Alpha provided:
0.085
Alpha is -40.28% below industry average alpha yield
Alpha is 539% higher than market/& is unsustainably high
Analysis of Cost of Capital of
VRTX
Equity cost of capital:
0.063
Equity cost of capital is -43.34% below industry mean WACC
Unlevered (without debt) cost of capital:
5.85%
Before-tax cost of debt:
6.96%
After-tax cost of debt:
5.50%
Overall debt rating:
Lowest medium B grade (second lowest)
Weighted average cost of capital (WACC):
5.50%
WACC is -31.55% below industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$30.99
Revenue growth rate per share of (3Y):
6.61
Annual revenue growth rate is -74.99% below industry average
EPS:
$9.49
Expected Annual growth rate of EPS (3Y):
25.30%
Expected future EPS growth rate is 153.52% higher than the Biotechnology industry
Free cash flow (FCF) per share:
$9.42
-
-
Debt per share
$3.40
EBITDA per share
$11.92
Valuation Analysis Today of
VRTX
P/E Ratio:
22.73
P/E Ratio of Competitors/Peers:
42.04
P/E ratio is -45.94% lower than main peers & is -74.67% lower than the industry
Stock price/value with industry average P/E ratio: $851.52
VRTX is -67.00% undervalued if valued using industry average P/E ratio
-
-
P/S (Price to Sales ratio):
9.07
Price to sales ratio is -77.61% below the industry mean
P/B (Price to book value ratio):
6.61
Price to free cash flow: 29.83
-
Net income growth rate (3Y):
9.31%
Net income growth rate is -86.81% lower than the industry average net income growth rate
Dividend Analysis
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Dividend History:
--$0.00
--$0.00
--$0.00
--$0.00
--$0.00
--$0.00
-
In-depth Debt & Leverage Analysis
Debt to equity ratio:
8.00%
Net debt to equity ratio:
-61.68%
Debt to assets ratio:
6.12%
Net debt to assets ratio:
-47.19%
Debt-to-asset ratio is -85.48% below industry average
Ability to repay debt:
Interest coverage ratio:
50.35
Interest coverage ratio is -142.55% less than industry average
Looking forward:
Debt growth rate:
0.00%
-
Debt repayment rate in last quarter: 1.46%
Analysis of Key Statistics
Correlation of price movement with the market:
0.529
Statistical significance of correlation:
VRTX has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.34
Stock price is 55.63% more correlated with the market, compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.34
Correlation of price movement with Nasdaq (^IXIC):
0.01
Covariance of price movement with the market:
0.012
Kurtosis
13.225
Returns have severe fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are considerably more likely, compared to assets with normally distributed returns
Skewness of returns:
-1.094
Returns are left (negative) skewed; mean returns are lower than median and mode returns
Fundamental Analysis & Dupont Analysis of
VRTX
Gross Profit Margin Ratio:
352%
Operating Profit Margin Ratio:
36.93%
Operating profit margin is -108.62% lower than the industry
Net Profit Margin Ratio:
352%
Effective Tax Rate:
14.43%
Effective tax rate is 152.89% higher than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
22.47%
Return on equity (ROE) is -139.20% lower than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
17.19%
Return on assets (ROA) is -184.27% lower than the industry
Financial Leverage:
1.1x
Current Ratio:
4.75
Current ratio is -41.29% below industry average
Cash Conversion Cycle (days):
11.1
Cash conversion cycle is -97.91% below industry average
The remaining useful life of property plant & equipment is: 2.8 years
Stock based compensation to net income ratio:
5.32%
In-depth Efficiency Analysis
Revenue generated per employee:
2.0M
Each employee generates 26% more revenue than industry average revenue per employee
EBITDA generated per employee:
784.0K
Each employee generates 103% more EBITDA than industry average revenue per employee
Profit generated per employee:
628.5K
Each employee generates 391% more net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
228.9K
Each employee generates 55% more free cash flow than industry average revenue per employee
Assets/Capital per employee
998.7K
Each employee generates 55% more free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
Research & development (R&D) investment growth rate-- 66.77%
Growth rate in R&D investment/expenditure is -1961.07% lower than the industry
Competitors/Peer firms of
VRTX
ILLUMINA, INC. (XNAS:ILMN)
BioNTech SE (XNAS:BNTX)
REGENERON PHARMACEUTICALS, INC. (XNAS:REGN)
WALGREENS BOOTS ALLIANCE, INC. (XNAS:WBA)
DEXCOM, INC. (XNAS:DXCM)
ALIGN TECHNOLOGY, INC. (XNAS:ALGN)
ALXN
BIOGEN INC. (XNAS:BIIB)
CERNER CORPORATION (XNAS:CERN)
Current Analyst Ratings
Strong buy�42%
Buy�50%
Hold�21%
Sell�0%
Strong sell�0%
Overall analyst sentiment is: Buy
Income Statement
Period:
TTM
Date:
3/31/22
Revenue:
7.95B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
957.67M
6.99B
3.20B
-
863.22M
-
-
4.06B
5.04M
60.72M
132.67M
3.06B
2.94B
2.45B
2.86B
413.18M
2.45B
Statement of Cash Flow
Date:
Period:
35.90M
Differed Income Tax :
- 12300.00K
Stock Based Compensation :
130.30M
Change in Working Capital :
- 32800.00K
Accounts Receivables:
- 165200.00K
Other Working Capital:
-
Other Non-Cash Items:
73.00M
Net Cash Provided by Operating Activities:
956.20M
Investments in PP&E:
- 63600.00K
Net Acquisitions:
-
Purchases of Investments:
- 117100.00K
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
3/31/22
2022
Q1
7.60B
638.00M
8.24B
1.29B
338.90M
491.50M
10.36B
1.44B
1.00B
400.00M
-
945.50M
110.70M
3.89B
-
14.26B
173.60M
-
-
-
2.01B
2.18B
872.50M
296.40M
1.17B
-
3.35B
2.60M
3.96B
11.3M
6.93B
March 31, 2022 at 6:00:00 AM
5.02B
10.91B
14.26B
-
872.50M
- 6727600.0K
129.70M
-
- 51000.00K
- 12900.00K
-
- 117500.00K
-
35.00M
- 95400.00K
- 5900.00K
803.90M
7.60B
6.80B
956.20M
- 63600.00K
892.60M
Our Proprietary Portfolio Rating
Our Rating:
D
Price Forecast/Expected Price in Next 5 Years of
VRTX
2023
2024
2025
2026
2027
$373.54
$384.92
$396.64
$408.72
$421.17