Vertex (VRTX) Stock Research Report
May 9th, 2021
Quick Stock Overview
Sales ($M): 6,415
Net Cash per share: $22.87
Market Capitalization ($M): 55,658
Equity per share: $34.69
Debt / Equity: 0.1
Interest coverage: 56.0
Biotech and pharmaceutical companies are a very special type of investment category. They are difficult to analyze for multiple reasons:
Extremely technical products, hard to fully understand even for specialists.
Highly dependent on the future results of R&D
Very volatile stocks, mostly driven by clinical trials news.
Revenues are highly dependent on regulatory authorities, drug reimbursement prices, etc…
So, they are not really the typical company value investors are interested in, as it is difficult to give them a fair value. Assets are mostly immaterial (patents, goodwill, ongoing R&D), future returns are hard to predict. In addition, their high volatility makes Biotech stocks hardly the kind of steady stable compounders value investors look for.
But I would argue that such volatility is the friend of value investors. In the words of Ben Graham, “Mr. Market has a very unstable mood”.