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Will Vertex Pharmaceuticals Incorporated (VRTX) Make You Rich In 2025?

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23 hours ago

December 25, 2024

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Will Vertex Pharmaceuticals Incorporated (VRTX) Make You Rich In 2025?

We recently compiled a list of the 10 Stocks That Will Make You Rich In 2025. In this article, we are going to take a look at where Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) stands against the other stocks that will make you rich in 2025.

Jurrien Timmer, Director of Global Macro at Fidelity Management & Research Company, recently shared his outlook for the stock market in 2025. His analysis reflects cautious optimism, emphasizing potential growth and significant risks. Timmer described 2024 as a “Goldilocks” year for U.S. stock returns, characterized by robust earnings growth and rising valuations. The S&P 500 Index experienced a substantial increase, concluding the year with a gain of approximately 28% as it reached new all-time highs. This performance was driven by strong earnings from major companies, particularly the so-called “Magnificent Seven” stocks whose growth has significantly influenced the overall market dynamics.

Looking ahead to 2025, Timmer maintained a bullish stance on stocks but cautioned that investors should not expect returns to match the spectacular gains of the previous two years. He noted that while earnings forecasts remain strong, especially for the mega-cap stocks, valuations are stretched, currently sitting in the 90th percentile historically. This suggests that significant further expansion in price-to-earnings (PE) ratios could lead to a bubble scenario, which he believes is unlikely. He expects continued earnings growth to support stock prices in 2025. However, valuations may limit future growth. Timmer suggests that earnings must drive performance rather than further valuation expansion to avoid a bubble scenario.

With the bull market entering its third year, Timmer describes it as being in “later innings,” indicating increased caution regarding future performance. He also suggested several risks that could potentially impact the market in 2025. For instance, heavy reliance on a few mega-cap stocks poses a risk; if these stocks falter, it could drag down overall market performance despite broader participation from other stocks. Secondly, although he does not foresee a return to the high inflation rates of the past decades, he warns that rising inflation could lead to higher interest rates, which would negatively affect the stock market.

Our Methodology

To compile the list of 10 stocks that will make you rich in 2025, we conducted a consensus. We sifted through various internet rankings to get an initial list of stocks expected to explode in 2025. Next, we sourced analyst sentiment for each stock from CNN and ranked our list in ascending order of the analysts’ projected upside potential for the next twelve months. Please note that the data was recorded on Friday, December 20, 2024.

Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).

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Analysts Upside Potential: 35.93%

Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) is a global leader in cystic fibrosis (CF) treatments. CF is a genetic disorder affecting the lungs and digestive system. The company has developed CFTR modulators, which are designed to correct a defective protein that causes the disease’s symptoms. The issue with CFTR modulators is that they don’t work on every CF case. However, the company developed its competitive edge with the Trikafta treatment getting approved in 2019. Trikafta can treat approximately 90% of CF patients and has been a major contributor to the company’s revenue. It generated over $9.8 billion in revenue last year with a 12% increase in product revenue to $2.77 billion in the latest quarter i.e. third quarter of fiscal 2024.

Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) is advancing its CF treatment portfolio with a next-generation triple therapy known as Vanza. The company has submitted a New Drug Application (NDA) for Vanza, which has been accepted by the FDA with a priority review status. The target action date for approval is set for January 2, 2025. PGIM Jennison in its Q2 2024 investor letter mentioned that they expect the FDA approval for Vanza will lead to top-line and margin expansion for the company in 2025 and onwards.

Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) is one of the 10 stocks that will make you rich in 2025. With that, let’s take a look at what PGIM Jennison said about Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) in its Q2 2024 investor letter:

“Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) is a commercial-stage biopharmaceutical with a core franchise of small molecule CFTR modulators for cystic fibrosis (CF), a genetic and progressively fatal respiratory disease. Vertex has built a unique and unrivaled market position as the dominant market leader in CF, having created and expanded the market into a nearly $10B franchise and growing. Later this year, we expect them to receive approval for their next-gen CF triple therapy, which we think will drive top-line growth and margin expansion in 2025 onwards. Vertex is also developing an acute and chronic pain franchise. Vertex reported positive Phase 3 data in acute pain and Phase 2 data in chronic pain earlier this year; the FDA filing in acute pain has been completed, and pending approval, Vertex expects to launch in acute pain in early 2025. Beyond CF and pain, Vertex has focused its pipeline around genetically driven diseases with the potential for a transformative clinical benefit. It currently spans 5 disease verticals: sickle cell/beta thalassemia, type 1 diabetes, APOL-1 kidney disease, IgA nephropathy (from the recent acquisition of Alpine Immune Sciences), and alpha-1 antitrypsin disease. Vertex has had a strong start to the year and has delivered positively on several clinical trial readouts, as well as beat Q1 revenue estimates and maintained what was a better than expected ’24 guidance. Vertex has a busy catalyst calendar in 2H24 which include next-gen CF approval, acute pain approval for their first-in-class pain drug, and additional data sets in chronic pain.”

Overall VRTX ranks 9th on our list of the stocks that will make you rich in 2025. While we acknowledge the potential of VRTX as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than VRTX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.