QS Research · Michael Burry's Scion Capital analyst template · 2006
VERTEX PHARMACEUTICALS INC / MA (VRTX)
As of 2026-11-08 · 12/15 boxes filled from SEC filings and market data
Conclusion: WATCH
Conviction low · base case none · downside -33% · upside +16%
The market is not missing growth; it is paying for it. At $547.09 the stock trades at 34.9x TTM P/E, 30.1x EV/EBITDA and 10.57x EV/Sales with a 2.3% FCF yield. On the TTM to Sep 30, 2026 base of $4.54B EBITDA, $1.81B net cash and 253.54M shares, 30.1x EV/EBITDA is about $547 (0%), 20x is about $365 (-33%) and 35x is about $634 (+16%). Povetacicept's Nov 30, 2026 PDUFA and new-franchise growth could justify the 35x case, but the Q3 2026 EPS miss and Crinetics expense guide raise show the cost risk; the rule does not give a short because base is not -30% or lower, so this is a watch.
Key numbers
- Share price: $547.09
- Market cap: $138.71B
- Latest financial period: TTM to Sep 30, 2026
- Revenue (TTM): $12.95B
- EV / EBITDA (TTM): 30.1x
- P/E (TTM): 34.9x
- Price / book: 6.63x
The 15 boxes
- ✓ 1. Long-form business notes
Vertex is a commercial biotechnology company selling medicines for cystic fibrosis, sickle cell disease/transfusion-dependent beta thalassemia, and acute pain, primarily through specialty pharmacies, specialty distributors, and wholesalers. FY2025 revenue was $12.00B, operating income $4.17B, net income $3.95B, and operating cash flow $3.63B. Between the FY2020 10-K and the latest 10-K, Vertex moved from four CF medicines plus clinical-stage cell/gene and pain programs to five CF medicines plus approved CASGEVY and JOURNAVX and five pivotal programs.
- ✓ 2. Competitive advantage
Vertex's record shows scale and cash generation built on a CF franchise that supplies substantially all product revenue: revenue rose every year in the FY2020-FY2025 XBRL window, from $6.21B to $12.00B, with operating income of $4.17B in FY2025 after a one-year operating loss in FY2024. The advantage is a licensed, regulated franchise (years-long FDA approval path, payer contracts, shared APIs across CF products), not a low-cost position: the 10-K concedes competitors with greater resources, and newer franchises (CASGEVY, JOURNAVX) carry explicitly worse economics and face lower-cost alternatives. Operating margin has compressed from about 48% in FY2022 to about 35% in FY2025 while revenue nearly doubled, and payers (Colorado PDAB, MFN/GUARD Model proposals) plus clinical setbacks (VX-264, VX-993) are the visible pressure points. Net: a durable but narrow and price-regulated moat, funding $3.63B of FY2025 operating cash flow and $2.02B of buybacks.
- ✓ 3. 10-Q takeaways
Q3 2026 total revenues were $3,440.8M, up 12% year over year, and nine-month 2026 revenues were $9,761.6M, up 11%; the same-quarter release raised FY2026 revenue guidance to $13.15-$13.25B from $13.1-$13.2B. Growth is increasingly non-CF (CASGEVY $99.2M, JOURNAVX $58.3M, PALSONIFY $10.1M for September only), while TRIKAFTA/KAFTRIO fell 8%. Margins and earnings were hit by the Crinetics deal: cost of sales rose to 15.3% of net product revenues from 13.5%, total costs and expenses rose 44%, and roughly $500M of Crinetics compensation and transaction expense pushed GAAP net income to $654M from $1.1B (non-GAAP net income $1.2B in both quarters). Cash fell to $9.8B at September 30, 2026 from $12.3B at December 31, 2025 after $9.0B net cash for Crinetics, partly funded by a $4.5B term loan.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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