Biotechnology · NASDAQ
Current Price
$423.24
Intrinsic Value
Use the calculator below to estimate
Run a full DCF analysis on Vertex Pharmaceuticals Incorporated with auto-filled fundamentals, adjustable assumptions, and sensitivity heatmap.
Vertex Pharmaceuticals Incorporated, a biotechnology company, engages in developing and commercializing therapies for treating cystic fibrosis. The company markets SYMDEKO/SYMKEVI, ORKAMBI, and KALYDECO to treat patients with cystic fibrosis who have specific mutations in their cystic fibrosis transmembrane conductance regulator gene; and TRIKAFTA for the treatment of patients with CF 6 years of age or older who have at least one F508del mutation. Its pipeline includes VX-864 for the treatment of AAT deficiency, which is in Phase 2 clinical trial; VX-147 for the treatment of APOL1-mediated focal segmental glomerulosclerosis, or FSGS, and other serious kidney diseases which is in Phase 2 clinical trial; VX- 880, treatment for Type 1 Diabetes which is in Phase 1/2 clinical trial; VX-548, a NaV1.8 inhibitor for treatments of acute, neuropathic, musculoskeletal pain which is in Phase 2 clinical trial; and CTX001 for the treatment severe SCD and TDT which is in Phase 3 clinical trial. The company sells its products primarily to specialty pharmacy and specialty distributors in the United States, as well as specialty distributors and retail chains, and hospitals and clinics internationally. It has collaborations with Affinia Therapeutics, Inc.; Arbor Biotechnologies, Inc.; CRISPR Therapeutics AG.; Kymera Therapeutics, Inc.; Mammoth Biosciences, Inc.; Moderna, Inc.; Obsidian Therapeutics, Inc.; and Skyhawk Therapeutics, Inc.; as well as Ribometrix, Inc.; Genomics plc; Merck KGaA; Darmstadt, Germany, and X-Chem, Inc. Vertex Pharmaceuticals Incorporated was founded in 1989 and is headquartered in Boston, Massachusetts.
ROIC (TTM)
16.2%
ROE (TTM)
22.7%
FCF Yield
2.97%
Based on trailing twelve-month data, VRTX shows a free cash flow per share of N/A and a ROIC of 16.2%, key inputs for stock valuation using the DCF method. The P/FCF ratio of N/A and FCF yield of 2.97% are important context metrics when evaluating VRTX's stock valuation relative to peers.
The intrinsic value of VRTX depends on assumptions about future growth rate, discount rate (WACC), and terminal value. A DCF model discounts projected free cash flows back to present value — small changes in WACC can shift the estimate by 20% or more, which is why sensitivity analysis is essential.
Whether VRTX is undervalued depends on comparing the DCF-derived intrinsic value to the current market price of $423.24. A positive margin of safety (intrinsic value above market price) suggests potential undervaluation, but the degree of confidence depends on the reliability of your growth and discount rate assumptions.
To perform a DCF valuation on Vertex Pharmaceuticals Incorporated: (1) Start with the trailing free cash flow per share as the base, (2) project future FCF growth over 5-10 years based on Biotechnology industry trends and company fundamentals, (3) apply a discount rate (WACC) reflecting VRTX's risk profile, and (4) add a terminal value for cash flows beyond the projection period.
DCF (Discounted Cash Flow) estimates what a company is worth today based on its future cash generation. For Vertex Pharmaceuticals Incorporated, this means projecting how much free cash flow the Biotechnology will produce over the next 5-10 years, then discounting those amounts to today's dollars. VRTX's ROIC of 16.2% indicates strong capital efficiency, which supports higher growth assumptions in the DCF model.
WACC (Weighted Average Cost of Capital) is the discount rate in a DCF model — it reflects the minimum return investors require. For VRTX, the capital structure and equity risk premium determine WACC. A 1% increase in WACC typically reduces the intrinsic value by 10-15%.
