Vertex Pharmaceuticals (VRTX +1.13%) has been a bright spot in this year's bear market. The biotech stock has climbed 45%. That's as investors eagerly await what may be a new blockbuster in a new treatment area. The company recently submitted this candidate for blood disorders to regulators.
The past few years have brought Vertex ups and downs. But overall, the company has generated billions of dollars in profit and revenue. And it's been a winning investment for those willing to hold on for the long term.
So how much would you have made if you'd bought $10,000 worth of Vertex shares five years ago? Let's find out.
A profitable investment
Vertex stock was trading at about $140 exactly five years ago. With $10,000, you could have purchased 71 shares. Today, the stock is trading at $318. So the value of your investment would have more than doubled to reach $22,578.
Of course, you would have needed some patience. Vertex shares sank 34% from July 2020 through November 2021. Investors worried about clinical trial failures in Vertex's alpha-1 antitrypsin deficiency program. The bigger concern was that Vertex, a specialist in cystic fibrosis (CF) treatment, didn't have what it takes to expand beyond that area.
But if you continued to believe in Vertex's CF program and its pipeline in other disease areas, you would have won. Now the big question is: Should you continue to hold on to Vertex stock? Or if you haven't yet bought, is it too late to buy?
It's impossible to predict exactly how much Vertex will gain. The average Wall Street 12-month share price estimate calls for only a 1.8% increase -- but the most optimistic expects nearly a 40% increase.
NASDAQ: VRTX
Key Data Points
Long-term prospects
The best idea is to look at Vertex's revenue prospects over the long term in the CF business and other areas. And here, there's reason to be optimistic about more gains for this biotech giant.
Let's look at CF first. Vertex is the market leader globally, and the company expects this market dominance to last until at least the late 2030s. Today, Vertex's Trikafta has the ability to treat 90% of patients with CF. And the company is conducting phase 3 trials of a candidate that might even top Trikafta.
What about the 10% of patients that currently can't benefit from Vertex's products? The company is working with Moderna on a potential product for them. The two companies aim to begin clinical trials soon.
Last year, the CF business brought in more than $7 billion for Vertex. We can expect that number to grow due to reimbursement agreements in more countries and expansion in younger age groups for current treatments. Possible approval of Vertex's newer CF candidates may add to growth.
A potential blockbuster
The big news beyond CF is exa-cel, a one-time curative treatment candidate for blood disorders. Vertex holds the rights to 60% of potential profits -- partner Crispr Therapeutics gets 40%. The companies submitted exa-cel to regulators in the U.S., Europe, and the U.K. last month. So, this blockbuster revenue opportunity may be in Vertex's very near future.
Vertex has a handful of other compelling candidates in the pipeline that make it a company with solid growth prospects farther down the road, too.
All of this means there are plenty of potential motors to lift Vertex's earnings and share price over time. So, yes, Vertex has climbed quite a bit in recent years. But another era of growth is ahead. And that means it's not too late to buy Vertex shares today -- and hold on for the long haul.
