Vertex Misses Street Expectations but Delivers Solid Start to 2025; Expectations for Continued Growth and Diversification of Product Base; Reiterate BUY Rating.

On May 5, 2025, Vertex reported consolidated financial results for the first quarter ended March 31, 2025, and adjust edits FY 2025 financial guidance. Total revenue of $2,770.2 million increased 3% year-over-year, missing Kingswood Capital’s estimate of $2,850.0 million by 2.8%. GAAP EPS of $2.49 for the quarter fell 32.2% short of our forecast of $3.67 due to a one time intangible asset impairment charge of $379.0 million.

Vertex adjusted its FY 2025 revenue guidance from $11.75-12.00 billion to $11.85-$12.00 billion, reflecting expectations for continued growth in cystic fibrosis, including the launch ofA LYFTREK; continued uptake of CASGEVY for sickle cell disease and transfusion-dependent beta thalassemia in multiple regions; as well as early contributions from the commercial launch of JOURNAVX for acute pain. The company maintain edits prior guidance for combined GAAP R&D and SG&A expenses of $5.55-$5.70 billion (including approximately $100 million of acquired in-process R&D [AIPR&D] expenses), as well as a non GAAP effective tax rate of 20.5%-21.5%.

Vertex reported progress with its ongoing CASGEVY®, ALYFTREKTM, and JOURNAVXTM launches in sickle cell disease/beta-thalassemia, cystic fibrosis, and acute pain indications, respectively.

Vertex also continues efforts to diversify its product base by advancing multiple development programs into late-stage clinical trials and toward commercialization. Phase 3 trials are ongoing in chronic pain, Type 1 diabetes, IgA nephropathy (IgAN), and APOL1-mediated kidney disease, which, if successful, could set up potential filings for FDA regulatory approval in 2026.

Sustained execution has helped Vertex achieve both a strong operating margin and cash position, allowing continued, significant investments in its pipeline and commercial capabilities. In ourview, yesterday’s selloff of VRTX shares will prove to be a temporary blip on the stock chart and presents a buying opportunity, while Vertex’s long-term prospects remain strong. We reiterate our BUY rating and maintain our $500 price target on the stock. We expect that ongoing diversification of the company’s revenue base, disease areas of focus, R&D pipeline, and operating geographies will build long-term value for shareholders.