VRTX Vertex Pharmaceuticals
CF cash machine funding a real pipeline; fairly priced unless kidney and pain launches outperform.
The story
Vertex holds a near-monopoly in cystic fibrosis. Its CFTR modulators (Trikafta, and now the once-daily Alyftrek with lower royalties) produce very high margins and recurring cash. It is a mature franchise that is diversifying into new growth: Casgevy gene editing, Journavx in non-opioid pain, and a kidney pipeline (povetacicept for IgAN, inaxaplin for APOL1) plus zimislecel in type 1 diabetes. It sits between late growth and early maturity, and pipeline execution decides whether growth lasts past the CF plateau.
The 12-year horizon reflects a durable CF moat and a long pipeline runway. The 45% target margin sits between the 2022 peak and TTM 40%, helped by Alyftrek's royalty savings and offset by launch spending. Sales-to-capital is set at 1.5, not the reported 0.67, because the reported figure is distorted by acquired IPR&D (Alpine); organic reinvestment is capital-light.
Value drivers
| Revenue growth (Y1) | 10.0% |
| Terminal growth | 3.5% |
| Forecast horizon | 12y |
| Target operating margin | 45.0% |
| Years to target margin | 4 |
| Sales-to-capital | 1.50 |
| Beta | 0.90 |
| Failure probability | 2.0% |
| Cost of capital (WACC) | 9.2% |
| Terminal WACC | 9.7% |
Valuation bridge
| PV of explicit FCFF | 46.67B |
| PV of terminal value | 47.74B |
| Equity value | 97.51B |
| ÷ shares → per share | $384.70 |
News
bullish +0.60 · 8 articles
- Maze Therapeutics (MAZE) Shares Moved, So What Is Driving Attention Now?
- Vertex Pharmaceuticals (VRTX) Increases Despite Market Slip: Here's What You Need to Know
- Will Vertex's Kidney Disease Pipeline Be a New Growth Engine?
- Lilly’s latest China drug deal; Immunovant’s setback in lupus
- CRISPR Therapeutics vs. Vertex Pharmaceuticals: Which Healthcare Stock Is a Better Buy in 2026?
- Vertex (VRTX) Stock Could Be 24% Undervalued As Kidney Trial Progress Continues
- Vertex Posts Positive Phase II Data on Kidney Disease Drug
- Maze Therapeutics Shares Rise 2.9% After CIBC Initiates Coverage
Projected free cash flow to the firm
| Yr | Revenue | Growth | Margin | NOPAT | Reinvest | FCFF | PV |
|---|---|---|---|---|---|---|---|
| 1 | 13.85B | 10.0% | 41.3% | 4.87B | 839.15M | 4.03B | 3.69B |
| 2 | 15.15B | 9.4% | 42.5% | 5.49B | 868.52M | 4.62B | 3.87B |
| 3 | 16.48B | 8.8% | 43.8% | 6.14B | 890.56M | 5.25B | 4.03B |
| 4 | 17.84B | 8.2% | 45.0% | 6.84B | 904.15M | 5.93B | 4.17B |
| 5 | 19.20B | 7.6% | 45.0% | 7.36B | 908.26M | 6.45B | 4.15B |
| 6 | 20.56B | 7.0% | 45.0% | 7.88B | 901.97M | 6.97B | 4.11B |
| 7 | 21.88B | 6.5% | 45.0% | 8.38B | 884.54M | 7.50B | 4.05B |
| 8 | 23.17B | 5.9% | 45.0% | 8.88B | 855.42M | 8.02B | 3.96B |
| 9 | 24.39B | 5.3% | 45.0% | 9.34B | 814.32M | 8.53B | 3.86B |
| 10 | 25.53B | 4.7% | 45.0% | 9.78B | 761.19M | 9.02B | 3.74B |
| 11 | 26.57B | 4.1% | 45.0% | 10.18B | 696.25M | 9.48B | 3.60B |
| 12 | 27.50B | 3.5% | 45.0% | 10.54B | 620.05M | 9.92B | 3.44B |
Key risks
- The CF franchise plateaus and pipeline launches (Journavx, Casgevy) ramp more slowly than expected
- Povetacicept or zimislecel fails or is delayed in the clinic or at regulators
- US drug pricing reform (IRA negotiation, MFN) compresses margins on high-priced specialty drugs
Catalysts
- Povetacicept IgAN accelerated approval filing and launch
- Journavx uptake and Phase 3 data in diabetic peripheral neuropathy pain