Is Vertex Pharmaceuticals Heading to $600?

Vertex Pharmaceuticals (NASDAQ: VRTX) has had a busy few years. The biotech company, known for its leadership in the cystic fibrosis (CF) treatment market, has proven its ability to broaden into other areas -- and win. The company gained approval for blood disorders treatment, Casgevy, and later for non-opioid pain drug, Journavx. And Vertex expanded its CF leadership with a new approval in that area, too.

Just recently, the company delivered more good news to investors: Povetacicept, its candidate for kidney disease IgA nephropathy, met its goals, and the company aims to submit it to regulators by the end of the month.

Considering the good news, is Vertex heading to $600? Let's find out.

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Vertex's cystic fibrosis leadership

So, first, a bit of background on this top biotech player. Vertex is the leader in the CF market, selling a portfolio of CFTR modulators. These are treatments that correct a faulty protein that sets off symptoms of the disease. Vertex's drugs are able to address about 90% of the CF patient population -- not 100%, because the disease involves many different genetic mutations. But Vertex's work on a candidate to treat that remaining patient population looks promising.

The CF portfolio brings in blockbuster revenue, and in the latest full year, Vertex's sales reached $12 billion.

Moving forward, Casgevy and Journavx may add to this growth. This year alone, Vertex predicts non-CF drugs to generate at least $500 million. The company has said that each of these new drugs may become multi-billion-dollar opportunities. Vertex may soon have another non-CF drug joining its portfolio as povetacicept reaches the regulatory review stage -- and the company is applying for accelerated review. An approval here would give Vertex a fourth treatment franchise, further expanding its commercial presence.

A path to $600?

Now, let's consider whether this stock, trading for about $480 today, might be heading to $600. This would represent a 25% increase for the stock, and would take market value from $121 billion today to $152 billion.

Mathematically, this works out -- such a gain and increase in market share aren't unrealistic for Vertex. Whether it happens or not in a period of six months to a year will depend on the company generating news to support investor optimism. For example, an approval of povetacicept could take the stock part of the way to this goal -- and strong revenue performance of new drugs Casgevy and Journavx as well as advancements in the pipeline may play a role too.

Vertex may be less impacted by general headwinds in the market as investors often turn to healthcare stocks when times are tough. Meanwhile, the stock looks reasonably priced today at 24x forward earnings estimates. All of this could help push this top biotech player to $600 in the months ahead.

Adria Cimino has positions in Vertex Pharmaceuticals. The Motley Fool has positions in and recommends Vertex Pharmaceuticals. The Motley Fool has a disclosure policy.