Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) investors will be delighted, with the company turning in some strong numbers with its latest results. Vertex Pharmaceuticals beat earnings, with revenues hitting US$2.7b, ahead of expectations, and statutory earnings per share outperforming analyst reckonings by a solid 14%. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the consensus forecast from Vertex Pharmaceuticals' 30 analysts is for revenues of US$10.8b in 2024. This reflects a credible 5.6% improvement in revenue compared to the last 12 months. Statutory per-share earnings are expected to be US$15.31, roughly flat on the last 12 months. In the lead-up to this report, the analysts had been modelling revenues of US$10.7b and earnings per share (EPS) of US$14.90 in 2024. So the consensus seems to have become somewhat more optimistic on Vertex Pharmaceuticals' earnings potential following these results.
The consensus price target was unchanged at US$462, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Vertex Pharmaceuticals, with the most bullish analyst valuing it at US$577 and the most bearish at US$325 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Vertex Pharmaceuticals shareholders.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that Vertex Pharmaceuticals' revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 7.5% growth on an annualised basis. This is compared to a historical growth rate of 21% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 18% annually. Factoring in the forecast slowdown in growth, it seems obvious that Vertex Pharmaceuticals is also expected to grow slower than other industry participants.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Vertex Pharmaceuticals' earnings potential next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Vertex Pharmaceuticals' revenue is expected to perform worse than the wider industry. The consensus price target held steady at US$462, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on Vertex Pharmaceuticals. Long-term earnings power is much more important than next year's profits. We have forecasts for Vertex Pharmaceuticals going out to 2026, and you can see them free on our platform here.
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.
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