Biotech stock Vertex Pharmaceuticals is forming a base and nearing a buy point. VRTX stock is Monday's IBD 50 Stocks To Watch pick and a member of the IBD Breakout Stocks Index.
Vertex Pharmaceuticals researches and develops medical treatments for cystic fibrosis, sickle cell disease, muscular dystrophy, kidney disease and type 1 diabetes. The biotech blue chip has worldwide reach, with headquarters in Boston and London.
Vertex and Crispr Therapeutics just announced a nonexclusive licensing agreement. Vertex will use Crispr's gene editing technology to develop type 1 diabetes cell therapies. The company will pay $100 million upfront while future payments will include royalties.
VRTX stock fell over 1% while Swiss-based CRSP rose over 2% on the news.
Vertex holds third place out of a whopping 792 stocks in the Medical-Biomed/Biotech industry group, which is ranked 50th out of 197 IBD groups. In addition, the group ranks second out of 14 groups in the broader medical sector.
Company earnings in the latest quarter grew 25%, up from 14% in the prior quarter. Quarterly sales grew a 11% year over year, down from 18% and 22% in the last two quarters.
Meanwhile, full-year 2022 EPS grew an impressive 54%. Analysts project 9% growth in 2023 and an 8% decline in 2024.
VRTX Stock Nears Buy Point
The Nasdaq 100 component is valued at nearly $80 billion. VRTX stock is forming a cup base and nearing a 325.29 buy point, according to MarketSmith pattern recognition. The buy point is at a 52-week and all-time high.
Shares rose 3.2% in heavy volume Friday, adding to the right side of the cup.
VRTX stock fell after the biotech reported better-than-expected Q4 earnings per share and in-line sales February. It also offered full-year 2023 revenue guidance of $9.55 to $9.7 billion for its cystic fibrosis treatment Trikafta, at the top end of analyst estimates.
The decline sent shares below the 50-day moving average before they found support at the 200-day moving average and rounded the cup's bottom.
In early March, Vertex received FDA clearance to study stem-cell-derived therapies for type 1 diabetes and will start clinical trials in upcoming months.
The stock rose above the 50-day line earlier this month after positive phase 2 results for a therapy used to treat chronic kidney disease. Shares continue to build the right side of the cup and are up 8% this month.
Mutual Funds Beef Up Holdings
Mutual funds hold 60% of shares, with 3,492 owning VRTX in December, up from 3,347 in September and 3,228 in June. The CAN SLIM investing strategy looks for increased fund ownership for conviction.
Fidelity Contrafund (FCNTX) and MFS Growth Fund A (MFEGX) have added shares in recent quarters, among others.
Just last week, Bernstein initiated coverage of Vertex stock with an outperform rating and 344 price target.
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