VERTEX PHARMACEUTICALS INC / MA (VRTX): what the price requires
At today's price, VERTEX PHARMACEUTICALS INC / MA (VRTX) is priced for +21.4% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/VRTX
Headline
| Field | Value |
|---|---|
| Ticker | VRTX |
| Company | VERTEX PHARMACEUTICALS INC / MA |
| Current price | $480.63/sh |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 10.2% |
| Operating margin today | 34.8% |
| Margin compression implied | -24.6pp |
| Implied growth | 21.4% |
| Multiple paid | 29x operating income |
The operating-margin requirement is derived from the framework's value band at year 7, a separately labeled basis from the headline growth/duration solve.
Solve inputs: computed at a 8.4% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~8.2pp.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | -0.26σ |
| cohort percentile (of 112 peers) | 72 |
| sustained it ~5 years at this level | 38% |
| implied end-window share | 0% |
Valuation X-Ray
The price is justified by relative-multiple; asset-based/earnings-power land below the price.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 2.63x | 5 | expensive |
| Earnings | 3.05x | 5 | expensive |
| Relative | 1.19x | 5 | expensive |
| Growth | 1.35x | 3 | expensive |
Families that justify the price: Relative Families that call it expensive: Asset, Earnings
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.0%); the inversion above states its own rate.
Per-Model Detail (n=18)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $356.14 | 1.35x | yes | FCF base $3.9B, growth 10% (input: historical growth), terminal g 4.0%, WACC 9.0%, 6yr projection |
| DCF Exit Multiple | Growth | $498.25 | 0.96x | yes | Exit EV/EBITDA: 23.1x / 25.1x / 27.1x (bear / base = today's held flat / bull), 6yr |
| Relative Valuation | Relative | $403.19 | 1.19x | yes | P/E 24x (static sector reference · 2026-04), scenarios: 20.0x / 24.0x / 28.0x (bear / base = reference held flat / bull), EV/EBITDA 18.73x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $182.99 | 2.63x | yes | BV/sh $75.54, ROE (TTM) 22.4%, ke 9.3% |
| Two-Stage Excess Return | Asset | $283.57 | 1.69x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $331.27 | 1.45x | yes | Rev $12.2B, growth 10% (input: historical growth; tapered), Terminal P/S: 6.7x / 8.0x / 9.3x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $589.75 | 0.81x | yes | EPS $16.85, growth 35% (input: historical EPS growth), PEG=0.81 (Undervalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $106.83 | 4.50x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $3.02B × (1−18%) / WACC 9.0% → EPV (no growth) |
| Residual Income | Asset | $264.52 | 1.82x | yes | BV $75.54 + 5yr PV of (ROE (TTM) 22.4% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $169.24 | 2.84x | yes | √(22.5 × EPS $16.85 × BVPS $75.54) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $306.84 | 1.57x | yes | EBITDA $4.90B × sector EV/EBITDA 16.0x |
| FCF Yield | Earnings | $157.53 | 3.05x | yes | FCF $3710.3M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $128.59 | 3.74x | yes | SBC-adj FCF $3.02B (FCF $3.71B − SBC $0.69B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $543.69 | 0.88x | yes | EPS $16.85 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $40.99 | 11.73x | yes | BV $75.54 × (ROIC 4.9% / WACC 9.0%) |
| P/Sales Sector | Relative | $190.68 | 2.52x | yes | Revenue $12.22B × sector P/S 4.0x |
| PEG Fair Value | Relative | $631.88 | 0.76x | yes | EPS $16.85 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x |
| Earnings Yield | Earnings | $182.16 | 2.64x | yes | EPS $16.85 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net cash | $7.1b |
| Net debt / NOPAT (after-tax) | -2.11x (net cash) |
| Net debt / operating income (pre-tax) | -1.74x (net cash) |
| Share count CAGR (buyback) | -0.2% |
| Burning cash | no |
Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.
Bullet Takeaways
- Vertex still runs almost entirely on cystic fibrosis, where it has no direct competitor, and its 2025 product revenue grew "$950.5 million, or 9%, as compared to 2024, primarily due to continued strong demand for TRIKAFTA/KAFTRIO as well as contributions from our launches of ALYFTREK, JOURNAVX and CASGEVY."
- The biggest risk is concentration: a single disease franchise carries the company, and the 10-K flags "pricing and reimbursement pressures that could have a material adverse effect on our business" as that franchise matures.
- Next milestone is regulatory: the FDA has set a PDUFA target action date of November 30, 2026 for povetacicept in IgA nephropathy, the first real test of whether Vertex can repeat its CF playbook outside CF.
Bull Case
The most surprising thing about Vertex is what its balance sheet looks like for a company the market treats as a one-product biotech. It carries about $7.1 billion in net cash against roughly $112 million of gross debt, interest coverage in the hundreds of times, and a share count that has edged down rather than up. This is not a company financing its existence; it is one deciding what to do with the cash a near-monopoly throws off.
That near-monopoly is cystic fibrosis. Vertex makes the only approved medicines that treat the underlying defect of the disease, and demand keeps compounding. The FY2025 10-K reports net product revenue rose "$950.5 million, or 9%, as compared to 2024, primarily due to continued strong demand for TRIKAFTA/KAFTRIO as well as contributions from our launches of ALYFTREK, JOURNAVX and CASGEVY." The newest CF medicine, ALYFTREK, is taking over the franchise globally while the older regimen still sells, so the patent runway extends as patients migrate to the next-generation drug. Total product revenue reached about $11.0 billion in 2025. A 38% trailing operating margin on that base is the kind of profitability that funds a pipeline without diluting holders.
What makes the bull case more than a CF story is that the diversification is finally producing revenue rather than press releases. The 10-K notes growth came from "increased contributions from CASGEVY and JOURNAVX," the gene-editing therapy for sickle cell and beta-thalassemia, and the first new non-opioid acute pain medicine in decades. Neither is large yet, but both address markets far bigger than CF, and both are Vertex's own science rather than licensed assets. The company has spent years and its CF cash flow building a second and third act, and 2025 is the year those started showing up in the revenue line. The price asks for roughly 20% operating growth for five years, which sits within what the company has recently delivered. The bet is that the pipeline keeps the growth going once CF plateaus.
Bear Case
The structural truth a holder would rather not face is that almost every dollar of Vertex's profit still comes from one disease, and that disease has a finite patient population the company has largely already captured. CF is not a growth market in the way the price needs; it is a deep, defensible, but bounded one. The 10-K is direct that "revenues from our products depend, to a large degree, on the extent to which the products are purchased by customers, such as wholesalers, pharmacies, and hospitals," and that the company is "subject to pricing and reimbursement pressures that could have a material adverse effect on our business, revenues, and results of operations." Once the last eligible CF patients are on the newest regimen, the growth has to come from somewhere else, and that somewhere else is unproven at scale.
The non-CF pipeline is real, but the bear case is that it is early and the price is not waiting. CASGEVY is a logistically complex, high-priced gene therapy with a slow patient-by-patient ramp, and JOURNAVX is entering a crowded pain market where, in the 10-K's own words, success depends on overcoming "sales, marketing, pricing, and/or distribution challenges associated with introducing a product into a highly competitive market," with no guarantee Vertex "may not succeed in developing JOURNAVX for additional indications or in advancing other product candidates." A new non-opioid analgesic still has to displace generics that cost pennies, and payers gatekeep accordingly.
On valuation the methods disagree about the price in a telling way. The relative-multiple lens, comparing Vertex to its sector, roughly defends $452 (as of June 27, 2026). But the earnings-power methods, which capitalize the company's normalized profit without crediting future growth, land near $107 to $158, and the asset-value methods sit in the low-to-mid $200s. The price leans on the assumption that the pipeline converts CF cash into a second growth engine. If the non-CF launches stay modest while CF flattens, the multiple has to fall toward the methods that do not assume the transition succeeds. The cash pile cushions the downside, but it does not justify the growth premium.
Valuation
What the price is betting is straightforward to state. At $452 (as of June 27, 2026) the market pays roughly 27 times company-wide operating income, which inverts to operating growth of about 19.6% a year for five years. Keep that approximate; it is one solve under fixed assumptions. The pace itself is within what Vertex has recently delivered, so the bet is less about whether the company can grow fast than about whether the growth survives the maturing of its only large franchise.
The methods we use to triangulate land in two camps. The peer-multiple lens broadly reaches the price; comparing Vertex to its sector at a market-typical earnings multiple lands near $377, close enough that the price is defensible on relative grounds. The static value lenses do not. The earnings-power methods, which capitalize normalized profit at the cost of capital with no growth credited, sit between roughly $107 and $158, and the asset-value methods land in the low $200s. That spread is the premium. It is the value the market assigns to growth and pipeline conversion that the no-growth methods structurally cannot frame. This is a quality-growth read, not a deep-value one, and not a bet beyond what any method supports.
Solvency makes the downside unusually soft for a biotech. Vertex holds about $7.1 billion of net cash, gross debt is trivial against operating profit, and the company is not burning cash. The cohort here is large-cap biopharma, where Vertex's roughly $11.0 billion product base sits among peers like Regeneron and Bristol Myers. The off-operating equity stakes the company carries add a small further floor. None of that adds to the upside; the cash bounds the worst case rather than justifying the multiple, which still rests on the pipeline doing what the CF franchise did.
Catalysts
Vertex opened 2026 by reaffirming the trajectory. First-quarter 2026 revenue rose about 8% year over year to roughly $2.99 billion, and the company reiterated full-year 2026 revenue guidance of $12.95 to $13.1 billion, including at least $500 million from non-CF products. The growth mix is the story: CASGEVY contributed about $43 million and JOURNAVX about $29 million in the quarter, together accounting for more than a quarter of the revenue growth, evidence the diversification is starting to move the needle rather than just the narrative.
The pipeline carries the near-term catalysts. The FDA accepted Vertex's application for povetacicept in IgA nephropathy and set a PDUFA target action date of November 30, 2026, the clearest single event for whether Vertex can build a franchise in kidney disease. The FDA also granted a national priority review voucher for CASGEVY in children ages 5 to under 12, which would widen the addressable population for the gene therapy. For a company the market still prices largely on CF, each of these is a test of the second act, and the povetacicept decision late in 2026 is the one to watch.
Peer Cohorts (Per Segment, With Filing Citations)
Pharmaceuticals (single segment) (reported)
- REGN (REGENERON PHARMACEUTICALS, INC.)
- (no filing in the citation store)
- GILD (GILEAD SCIENCES, INC.)
- (no filing in the citation store)
- AMGN (Amgen Inc.)
- (no filing in the citation store)
- BIIB (BIOGEN INC.)
- (no filing in the citation store)
- BMRN (BioMarin Pharmaceutical Inc)
- (no filing in the citation store)
- EXEL (EXELIXIS, INC.)
- (no filing in the citation store)
- NBIX (NEUROCRINE BIOSCIENCES, INC.)
- (no filing in the citation store)
- JAZZ (Jazz Pharmaceuticals plc)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
Q1 2026 earnings release, May 4, 2026 · company pipeline update, 2026