Why Vertex Pharmaceuticals Stock Ticked Higher on Tuesday
Key Points
Its sales rose at a double-digit rate; net profit growth was more modest.
There's another development with the company more worth monitoring, however.
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A banner Tuesday for U.S. stocks was also a prosperous one for Vertex Pharmaceuticals' (NASDAQ: VRTX) shares. The company reported encouraging, if not spectacular, quarterly results, and investors bought into it sufficiently to push it to a nearly 2% gain that trading session.
A small dose of bullishness
Vertex unveiled its second-quarter results after market close on Monday, hence the following day's mildly positive investor reaction.
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This wasn't due to erosion in the fundamentals. The pharmaceutical company's revenue was $3.33 billion, up 12% year over year on sales of the company's cystic fibrosis (CF) drugs, and its diversification into new disease areas.
Regarding geography, Vertex's U.S. sales rose by 11% to $2.06 billion; the company attributed this, again, to CF drugs, plus sales of the sickle-cell disease treatment Casgevy and the moderate-to-severe pain medication Journavx.
As for the bottom line, Vertex's net income, not under generally accepted accounting principles (non-GAAP, or adjusted), crept up by 3% to nearly $1.21 billion, or $4.73 per share.
The consensus analyst estimates were $3.22 billion in revenue and $4.72 per share for adjusted net income.
Vertex also raised its full-year 2026 guidance. It's now expecting revenue of $13.1 billion to $13.2 billion, up from the previous estimate of just under $13 billion to $13.1 billion. It did not provide a net income forecast.
The Crinetics factor
The big story with Vertex isn't its legacy business; it's the recent deal to acquire Crinetics Pharmaceuticals. In the second-quarter earnings release, Vertex said that its asset-to-be will give the company its fifth "pillar," i.e., therapeutic area, with Crinetics' focus on rare endocrine diseases.
"With this breadth of commercial and clinical opportunities, we look forward to bringing more medicines to more patients around the globe and in so doing, creating long-term value," Vertex quoted CEO Reshma Kewalramani as saying.
To me, the absorption of Crinetics will be the development to watch with Vertex. I think it was a smart and opportunistic deal that, while expensive at an enterprise value of $8.8 billion, could really give Vertex's business a lift if properly integrated.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Vertex Pharmaceuticals. The Motley Fool has a disclosure policy.
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