QS Research · Michael Burry's Scion Capital analyst template · 2006
VERTEX PHARMACEUTICALS INC / MA (VRTX)
As of 2026-11-06 · 12/15 boxes filled from SEC filings and market data
Conclusion: WATCH
Conviction low · base case -7% · downside -28% · upside +21%
At $547.09 (N1), VRTX trades at 30.1x TTM EV/EBITDA (N25) and 34.9x TTM P/E (N27), near its 52-week high (N2), so the market already capitalizes the CF franchise plus pipeline. Using the section 13 TTM base, not an average of years, my base case marks the stock at the midpoint of the 22x-35x EV/EBITDA band: 28.5x × $4.54B (N13) = $129.4B EV, plus $1.80B net cash (N19-N20) less $1.92B leases (N21) = $129.3B equity, ÷253.54M shares (N5) ≈ $510, about -7%. Downside at 22x is $394 (-28%) and upside at 42.2x P/E on $3.98B net income (N14) is $662 (+21%), so the verdict rule gives neither long nor short. The franchise is high quality and still growing, but there is no deep-value margin of safety; watch for a lower price or evidence that CASGEVY/JOURNAVX/povetacicept broaden earnings beyond CF.
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's FY2025 revenue is $12.00B, generated by selling CF medicines, CASGEVY for SCD/TDT and JOURNAVX for acute pain through specialty pharmacy, distributor, hospital and ATC channels. The FY2020 10-K shows a narrower four-CF-medicine business serving about 83,000 people with CF; by FY2025 it has five CF medicines reaching nearly three quarters of about 97,000 people in its core geographies plus newer product franchises and five pivotal programs. FY2025 operating income was $4.17B and operating cash flow $3.63B, after a FY2024 operating loss and negative operating cash flow.
- ✓ 2. Competitive advantage
A durable but narrow moat, and the durability sits almost entirely in cystic fibrosis. FY2025 revenue was $12.00B, up from $6.21B in FY2020, with $4.17B operating income and $3.63B operating cash flow against only $437.6M capex — that is a high-return, low-capital franchise, not a story stock. But the company's own 10-K says substantially all net product revenues come from CF medicines, and neither new leg is proven: CASGEVY carries structurally higher manufacturing cost as a percent of revenue than CF, JOURNAVX enters a crowded acute-pain market with lower-cost alternatives, and the discovery engine has visibly missed (VX-264, VX-993). Competitors include organisations with substantially greater resources, and payor/pricing reviews (Colorado PDAB on TRIKAFTA, IRA, GUARD) are a direct tax on the pricing power the moat rests on.
- ✓ 3. 10-Q takeaways
Q3 2026 (quarter ended September 30, 2026) total revenues were $3,440.8M, up 12% from Q3 2025, and 9M 2026 was $9,761.6M, up 11%; CF product revenue was $3,273.2M (+8%) but TRIKAFTA/KAFTRIO fell 8% while ALYFTREK rose 186%. Cost of sales rose to 15.3% of net product revenues from 13.5%, and R&D/AIPR&D/SG&A rose to $2.2B from $1.5B, including about $500M of Crinetics compensation and transaction expenses. Cash and marketable securities fell to $9,821.2M at September 30, 2026 from $12,320.4M at December 31, 2025 after the $9.0B net Crinetics outlay and buybacks, partly offset by $4.5B under the 2026 Term Loan and $3,196.6M of 9M operating cash flow; new disclosures add Crinetics integration and ALYFTREK royalty arbitration risk.
- ✓ 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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