Vertex Pharmaceuticals Incorporated (VRTX) Stock Valuation — PE Analysis
Biotechnology · NASDAQ
Current Price
$444.93
PE Ratio (TTM)
26.1x
Intrinsic Value
$585.11
+24.0% margin of safety
COMPETITIVE MOAT
↑Cystic Fibrosis Monopoly
Vertex holds a dominant global position in cystic fibrosis treatments. This entrenched market leadership creates significant barriers to entry for competitors.
↑Strong R&D Pipeline
The company's successful development of povetacicept for IgA Nephropathy demonstrates its ability to innovate. This pipeline expansion diversifies revenue streams and strengthens its competitive edge.
↑High Switching Costs
Patients on Vertex's CF therapies have limited alternatives. The effectiveness and established treatment protocols make switching to a new therapy difficult and risky.
INVESTMENT RISKS
↓Regulatory Hurdles
The FDA's decision on povetacicept in November 2026 is a key event. Any delay or rejection could impact future growth prospects.
↓Competition in New Areas
While strong in CF, Vertex faces established players in other therapeutic areas it enters. New drug development always carries inherent competitive risks.
↓Pricing Pressures
As a leader in high-cost treatments, Vertex may face increasing scrutiny and pressure on drug pricing from payers and governments.
Base case
VRTX base case PE valuation
A base case PE valuation for VRTX estimates a fair value of about $585.11 per share, against a current price of $444.93. The model assumes 12.4% annual earnings growth, a 26x target PE multiple, and a 10% discount rate.
Intrinsic Value
$585.11
Margin of safety
+24.0%
Expected annual return
+5.6%
Base case assumptions: 12.4% annual earnings growth, 26x target PE, 10% discount rate, 5 year projection. Data as of 2026-06-12.
This base case uses default assumptions and is not financial advice. The fair value changes significantly when the target PE or earnings growth rate changes. Open the calculator to set your own assumptions and see the full sensitivity range.
Customize the VRTX PE valuation
Adjust the target PE, earnings growth, and discount rate to see how the fair value and margin of safety for Vertex Pharmaceuticals Incorporated respond.
Open PE Calculator for VRTXCompany Overview
Vertex Pharmaceuticals Incorporated is a leading biotechnology firm primarily focused on the discovery, advancement, and marketing of innovative treatments, particularly for cystic fibrosis (CF). The company offers a range of approved medications for CF patients, including SYMDEKO/SYMKEVI, ORKAMBI, and KALYDECO, which target specific mutations within the cystic fibrosis transmembrane conductance regulator gene. Additionally, they provide TRIKAFTA for individuals with CF aged six years and older who possess at least one F508del mutation. Beyond its established CF therapies, Vertex maintains a robust and diverse clinical pipeline. This includes VX-864, currently in Phase 2 for alpha-1 antitrypsin (AAT) deficiency; VX-147, also in Phase 2, addressing APOL1-mediated focal segmental glomerulosclerosis (FSGS) and other serious kidney conditions; VX-880, a potential treatment for Type 1 Diabetes undergoing Phase 1/2 trials; VX-548, a NaV1.8 inhibitor in Phase 2 for various forms of acute, neuropathic, and musculoskeletal pain; and CTX001, which is in Phase 3 development for severe sickle cell disease (SCD) and transfusion-dependent beta-thalassemia (TDT). The company distributes its pharmaceutical products through specialty pharmacies and distributors across the United States, while international sales are facilitated via a network of specialty distributors, retail chains, hospitals, and clinics. Vertex also engages in numerous strategic collaborations with partners such as Affinia Therapeutics, Arbor Biotechnologies, CRISPR Therapeutics, Kymera Therapeutics, Mammoth Biosciences, Moderna, Obsidian Therapeutics, Skyhawk Therapeutics, Ribometrix, Genomics plc, Merck KGaA, and X-Chem. Established in 1989, Vertex Pharmaceuticals is headquartered in Boston, Massachusetts.
Financial Metrics — VRTX PE Stock Valuation Data
PE Ratio (TTM)
26.1x
PEG Ratio
0.04
Earnings Yield
3.84%
ROE (TTM)
23.9%
Revenue/Share (TTM)
$48.23
Debt/Equity
0.10x
Frequently Asked Questions
What is the PE ratio of VRTX?
The trailing twelve-month PE ratio of VRTX reflects how much investors pay per dollar of Vertex Pharmaceuticals Incorporated's earnings. This metric is most useful when compared to Biotechnology peers and the company's own historical range.
Is VRTX overvalued based on PE ratio?
VRTX's PE of 26.1x combined with a PEG ratio of 0.04 provides a growth-adjusted perspective. A PEG below 1.0 suggests VRTX may be undervalued relative to its earnings growth rate. Keep in mind that PE-based valuation works best for profitable, mature companies — for high-growth or cyclical Biotechnology, a DCF analysis may be more appropriate.
How do I value VRTX stock using PE ratio?
To value Vertex Pharmaceuticals Incorporated using PE: (1) Compare the current PE (26.1x) against the Biotechnology median to assess relative pricing, (2) check the PEG ratio (0.04) to adjust for growth expectations, (3) review the 5-year PE range to identify where the stock sits historically, and (4) estimate fair value by multiplying a target PE by forward EPS estimates. This relative approach complements DCF's absolute valuation.
What is the PEG ratio of VRTX?
VRTX's PEG ratio is 0.04, calculated by dividing the PE ratio (26.1x) by the expected earnings growth rate. A PEG below 1.0 is traditionally considered a sign of undervaluation — the market may not be fully pricing in the growth potential. Note that PEG accuracy depends on the reliability of growth estimates.
Should I use PE ratio or DCF for VRTX stock valuation?
PE ratio gives a quick relative read — how VRTX is priced versus Biotechnology peers. DCF provides an absolute value based on projected free cash flows. For VRTX, with a strong ROE of 23.9%, both methods are worth using — PE for a market-relative check, DCF to stress-test whether fundamentals justify the price. Each method has blind spots: PE ignores capital structure and cash flow quality, while DCF is sensitive to growth and discount rate assumptions.
Learn More
- See VRTX DCF Valuation → — Intrinsic value via Discounted Cash Flow analysis
- PE Methodology — Step-by-step guide to PE ratio stock valuation
- DCF Methodology — Guide to discounted cash flow analysis
- PE Ratio — Understanding the price-to-earnings ratio
- Intrinsic Value — How to evaluate stock fair value
Related PE Valuations
All Healthcare valuationsP/E and DCF value VRTX with different methods and assumptions, so the two conclusions can differ. Compare the DCF intrinsic value.
Price as of 2026-06-12. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.