Vertex Pharmaceuticals Stock Lives Up to Bullish Expectations with Earnings Win

Some analysts are calling for a move to $200 for VRTX

Feb 1, 2018 at 9:14 AM
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Drug stock Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) was one of the best S&P 500 Index (SPX) performers of 2017, and that momentum is carrying over into the new year. VRTX shares are currently trading 5.8% higher in pre-market action, putting them on pace to open at a record high of $176.50, after the company's earnings release and drug announcements were met with a round of bullish analyst attention. Below, we'll take a closer look at all the Vertex Pharmaceuticals news today, and see how Wall Street is positioned on the hot stock.

Analysts Respond After Vertex Crushes Earnings Estimates

First of all, the pharmaceutical company blew past earnings estimates, posting 61 cents per share on an adjusted basis, versus an expected 53 cents. Revenue for the fourth quarter was also higher than expected, and a $500 million stock buyback was announced.

There were a number of drug updates, as well. Most notably, Vertex has chosen two treatments to use in late-stage drug trials for a combination therapy that's meant to eventually treat 90% of cystic fibrosis patients.

Several analysts have since responded bullishly, with Morgan Stanley, Barclays, and Baird all setting the bar at $200. Of course, this is nothing new for VRTX. There are 21 analysts covering the stock and 19 of them say it's a "strong buy" or "buy."

Options traders have also been very bullish. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows more than 10 calls have been bought to open for every call during the past two weeks. The front-month February 180 call saw the largest increase in open interest by far, and it would appear most the positions were bought to open. So, bulls have been betting on Vertex Pharmaceuticals topping $180 before the close on Friday, Feb. 16, when the contracts expire.

Taking a quick look back, the shares have already added 94% over the past year, as of Wednesday's close. More recently, the equity has risen nicely atop the 20-day moving average, while a pullback in December bottomed out just above the 200-day moving average, a trendline that hasn't been breached in almost a year.

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