Vertex stock is the IBD Stock Of The Day after bounding off its key moving averages as excitement grows for its non-cystic fibrosis plans.
Analysts are closely watching Vertex Pharmaceuticals' midstage kidney disease program. Vertex is trying to treat kidney diseases tied to mutations in the APOL1 gene — a pool of about 100,000 people in the U.S. and Europe.
The company is also partnered with Crispr Therapeutics on a gene-editing drug for two blood diseases. Further, Vertex is working on type 1 diabetes treatments and is partnered with Moderna to find a messenger RNA approach for cystic fibrosis.
As a result, Vertex stock had climbed more than 7% this year, as of Thursday's close. In comparison, the broader group of biotech stocks had toppled north of 21%. On the stock market today, Vertex stock added 1.3% to 238.66.
Vertex Stock Outperforms Its Peers
It's important to note, the market remains weak. But medical stocks are often insulated from economic and international turmoil.
Vertex stock is not only outperforming its industry group, shares have recently popped off their 50-day moving average and are now actionable, according to MarketSmith.com. A new flat base is also forming on the weekly chart.
For Vertex, cystic fibrosis drugs remain its bread and butter. In the December quarter, they generated $2.07 billion in sales, surging 27% year over year and beating forecasts. RBC Capital Markets analyst Brian Abrahams says those drugs could ultimately bring in $9 billion in future years.
Vertex's drug called Trikafta "continues to drive the lead in cystic fibrosis" treatment, Needham analyst Joseph Stringer said in a report Friday analyzing prescription trends. Trikafta is a combination of three drugs that can treat 90% of patients with the lung disease.
Stringer has a hold rating on Vertex stock.
Targeting A Broad Group
RBC's Abrahams also sees promise for Vertex's kidney disease efforts. Vertex tested the drug in patients with focal segmental glomerulosclerosis, or FSGS. That's a subset of the broad pool of patients with kidney disease due to mutations in the APOL1 gene.
Abrahams remains "confident that the biology supports the likelihood of replicated success in FSGS (a roughly $900 million opportunity) and meaningful probability of expanding into the much broader APOL1-mediated kidney disease population (additional $1.8 billion opportunity)," he said in a report to clients.
However, he has a sector perform rating on Vertex stock.
"Generating de-risking data and ultimate approval in the latter population may require more time," he said. He sees a 60% chance of Vertex gaining approval in FSGS patients and 35% potential in the broad population of APOL1-mediated kidney disease patients.
Stock Has Strong Ratings
In addition to the strong movement, Vertex stock also has bullish ratings, according to IBD Digital.
Its stock has a Composite Rating of 94, which puts Vertex stock in the top 6% of all stocks in terms of its fundamental and technical measures. Further, Vertex shares have a bullish Relative Strength Rating of 90, putting the stock in the top 10% of all stocks in terms of 12-month performance.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
