Vertex Pharmaceuticals will need to lean on its pipeline to prop VRTX stock, an analyst said Thursday after the company delivered a mixed first-quarter report.
Sales beat forecasts, but earnings came in light and Vertex maintained its full-year outlook. The latter point comes after Vertex won a reimbursement agreement for its cystic fibrosis medicines in Australia, RBC Capital Markets analyst Brian Abrahams said.
"There may be slight disappointment Vertex did not choose to raise guidance," he said in a report to clients. However, it "remains a high-quality story, but we believe at least levels pipeline success is key to drive the next leg of growth."
In after-hours trading on today's stock market, VRTX stock sank a fraction near 265.
VRTX Stock: Leaning On Its Pipeline
During the March quarter, Vertex earned $3.52 per share, minus some items, on $2.1 billion in sales. Earnings climbed 18% and Vertex notched a 22% sales gain. But the measures were mixed. Earnings missed expectations by a nickel per share. Sales beat FactSet's view for $2.08 billion.
The sales growth was driven entirely by Trikafta, Vertex's new triple pill that can treat 90% of patients with cystic fibrosis, a devastating and genetic lung disease. Meanwhile, sales of its three other drugs — Symdeko, Orkambi and Kalydeco — fell as patients switched to Trikafta.
Vertex is also working on a next-generation triple pill. Abrahams expects study results by year end or early 2023. Further, the company's gene-editing partner, Crispr Therapeutics could have additional results from tests in blood-disease patients by late 2022.
Meanwhile, Abrahams says he's looking for more clarity on Vertex's efforts in diabetes. The Food and Drug Administration recently placed Vertex's study on clinical hold. The FDA determined there wasn't enough evidence to support an increase in the treatment dose. VRTX stock fell 4.1% on the news.
Could Guidance Increase?
Vertex reiterated its outlook of $8.4 billion to $8.6 billion in product sales, which doesn't include other sources of revenue. VRTX stock analysts predicted $8.55 billion in sales.
"We believe there was some expectation this could be raised given the additional patients eligible for therapy following the Australia reimbursement, though Vertex has historically raised guidance in the second quarter, so may just be waiting to potentially do so," Abrahams said.
He kept his sector perform rating and 274 price target on VRTX stock.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
