Vertex Pharmaceuticals Incorporated VRTX stock has plunged 25.3% this year so far against the industry’s 5.4% increase.

VRTX Stock Outperforms Industry

Image Source: Zacks Investment Research

The stock’s price increase is mainly because the company gained approval for two new products, its novel non-opioid pain medicine Journavx (suzetrigine) and its fifth cystic franchise (CF) medicine Alyftrek, recently. Let us understand the company’s strengths and weaknesses to better analyze how to play the stock given the recent increase in price.

Consistent Rise in VRTX’s CF Product Sales

Vertex holds a dominant position in the cystic franchise (“CF”) market. Its CF sales continue to grow, driven by higher sales of Trikafta/Kaftrio in younger age groups. Vertex’s CF product revenues rose in the double-digit range for 10 consecutive years.

In 2024, Vertex’s revenues rose 12% year over year, driven by the continued strong performance and demand growth of Trikafta/Kaftrio, including in younger age groups and higher net realized pricing in the United States. While in the near term, expansion to younger age groups should continue to drive CF sales growth, the launch of Alyftrek should drive growth in the medium term.

Casgevy Diversifies VRTX’s Commercial Opportunity

The approval of Vertex and partner CRISPR Therapeutics CRSP one-shot gene therapy Casgevy for two blood disorders, sickle cell disease (SCD) and transfusion-dependent beta-thalassemia (TDT), has diversified Vertex’s commercial opportunities. 

Vertex and CRISPR Therapeutics’ Casgevy is the first-ever CRISPR/Cas9-based therapy to be approved anywhere in the world. Vertex believes Casgevy has the potential to be a one-time functional cure for SCD and TDT patients, with an estimated patient population of approximately 60,000 across the United States and Europe. Vertex is securing reimbursement and access to Casgevy globally. Though the launch was slow, Casgevy launch is picking up momentum and is expected to contribute significantly to revenues from 2025.

Vertex’s Two New Products to Drive Sales Growth

Vertex’s Alyftrek (vanza triple), a next-in-class triple combination regimen for treating people with CF aged six years and older, was approved by the FDA in December 2024. Vertex’s regulatory application for Alyftrek is also under review in the EU and some other countries. Alyftrek is a combination of vanzacaftor, a CFTR potentiator, deutivacaftor, a CFTR corrector and tezacaftor. This new once-a-day oral combination medicine has the potential for enhanced patient benefit than Trikafta and to become a new standard-of-care treatment in CF. It can potentially treat CF patients who have discontinued Trikafta or other Vertex CF medicines. It can improve dosing (once daily), lower the royalty burden and extend patent protection.

Journavx (suzetrigine), Vertex’s non-opioid NaV1.8 pain signal inhibitor, for the treatment of moderate-to-severe acute pain, was approved by the FDA in January 2025. At the fourth-quarter conference call, Vertex said that it has begun the commercialization of Journavx and is seeing tremendous interest and requests for information from both doctors and patients. Journavx sales are expected to pick up in the second half of the year as the product’s uptake accelerates through patient assistance and supply/stocking initiatives in the first half.

Vertex is also conducting a pivotal phase III program of Journavx in diabetic peripheral neuropathy, a form of peripheral neuropathic pain caused by damage to nerves. Vertex has completed a phase II study of VX-548 in patients with painful lumbosacral radiculopathy, another form of peripheral neuropathic pain and plans to advance the candidate to pivotal development.

Vertex believes Journavx has the potential to transform the treatment paradigm of pain, both acute and neuropathic. Pain is an area with limited treatment options, mostly highly addictive opioid-based medications.

Vertex’s Robust Mid-Stage Pipeline

In CF, Vertex is evaluating its medicines in younger patient populations and aims to have small-molecule treatments for most people with the condition. Additionally, Vertex is developing an mRNA therapeutic, VX-522, in partnership with Moderna MRNA for approximately 5,000 people with CF who do not make CFTR protein and who cannot benefit from its CFTR modulators. Data from the study is expected in the first half of 2025.

While Vertex’s main focus is on the development and strengthening of its CF franchise, the company also has a rapidly advancing mid- to late-stage pipeline in other disease areas beyond CF, such as acute and neuropathic pain, APOL1-mediated kidney diseases (AMKD), alpha-1 antitrypsin deficiency, IgA nephropathy and cell therapy for type I diabetes. Many of these candidates represent multibillion-dollar opportunities. Multiple pipeline catalysts are expected in 2025 and over the next few years.

Last year’s Alpine acquisition added povetacicept to Vertex’s pipeline, which Vertex believes has a “pipeline in a product” potential. Povetacicept is designed to target two proteins, namely BAFF and APRIL, which are jointly responsible for causing multiple serious autoimmune diseases. A phase III study on povetacicept for the treatment of IgA nephropathy is ongoing. Povetacicept is also being evaluated in two phase II basket studies, one in renal diseases and the second in hematologic conditions.

VRTX’s Valuation and Estimates

The stock is trading at a premium to the industry, as seen in the chart below.

Image Source: Zacks Investment Research

VRTX Stock Valuation

The Zacks Consensus Estimate for 2025 earnings has declined from $18.26 to $17.65 per share over the past 30 days, while that for 2026 has declined from $19.70 to $19.31 per share.

VRTX Estimate Movement

Image Source: Zacks Investment Research

Stay Invested in VRTX’s Stock

Declining estimates for 2025 and a premium valuation have made investors wonder if they should sell the stock. The recent pipeline setbacks are also a matter of concern for investors.

In December 2024, Vertex announced data from a phase II study on Journavx for LSR, which showed largely undifferentiated pain reduction from placebo. Despite the unimpressive data in phase II, management decided to forge ahead to a phase III study in this indication, which is considered a risky decision.

However, we believe Vertex is a good stock to have in one’s portfolio based on its strong overall financial performance and robust pipeline progress. Vertex faces minimal competition in the CF franchise. CF sales are expected to remain strong despite a slight slowdown in the growth rate. Casgevy and Journavx provide the necessary diversification from the CF franchise. The company’s dependence on the CF franchise for growth was a concern for several analysts, but it is gradually resolving. In 2025, Vertex expects its sales to grow around 8%, driven by continued CF franchise growth, including contribution from Alyftrek, the continued uptake of Casgevy in approved regions and initial sales from Journavx.

Though VRTX’s stock currently looks expensive, we believe that the company has growth potential. Those who already own the stock may retain it for some time to see if its CF sales continue to rise and how the Journavx and Alyftrek launchprogress. Vertex presently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Vertex Pharmaceuticals Incorporated (VRTX) : Free Stock Analysis Report

Moderna, Inc. (MRNA) : Free Stock Analysis Report

CRISPR Therapeutics AG (CRSP) : Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research