Categories Health Care, Trending Stocks

Vertex Pharmaceuticals (VRTX) stock soars to record high on bullish outlook

Less debt and more cash will be an advantage for Vertex to withstand economic downtrends

Vertex Pharmaceuticals Incorporated (NASDAQ: VRTX) continues to be in the luxury of escaping from the COVID-19 pandemic crisis. The stock reflected the comfort of the company after reaching a record high of $267.45 on Tuesday. This reflected that the stock demand has been more than the selling due to an increase in the overall activity of the company’s stock.

The trading volume was higher than the average volume. The investors and traders were interested in the company due to the bullish outlook trend. Despite the ground remaining shaky due to the postponement of the clinical trials and drug-launch delay, the company is not expected to show any weakness in the growth.

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Image Courtesy: Louis Reed/Unsplash

The pharma sector will be impacted by the virus outbreak at a minimal level that could delay certain trials. The market experts believe that the trials would be postponed to a later period of the year, specifically after June, that depends on the evolution of the pandemic cases.

The investors were positive about the company’s future due to the build and maintenance of the supply chain. The sell-side analysts do not see a meaningful adverse impact of the crisis on the majority of the pharma companies’ earnings. The pharma sector has been rallying driven by India’s lift of the ban on the export of hydroxychloroquine, which claimed to be impressive to treat COVID-19.

During March-end, the company, which makes drugs for cystic fibrosis, said its outlook continued to be unchanged due to the confidence in its supply chain and its ability for medicines supply. The outbreak will delay the clinical trials and temporarily pause enrollment of certain studies and finally delay the drug launch.

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For the fourth quarter, the company reported a 62% dip in earnings due to the release of the tax valuation allowance in the previous year, despite a 63% jump in the top line. The company has a differentiated strategy of investing in creating transformative medicines for diseases that include alpha-1 antitrypsin deficiency, APOL1-mediated kidney diseases, pain, and severe hemoglobinopathies.

The company has turned out to be an attractive target for investors as the accumulation of more cash than debt turned Vertex to a more financially stable position. As of December 31, 2019, the company had total debt of $673.17 million while the total cash stood at $3.81 billion.

Vertex is better able to withstand economic downtrends and deteriorating macroeconomic conditions as debt is less than the total cash. Also, the company has been investing in long-term growth and this will continue in the future too. Following the bullish pattern trend of the shares, the performance outlook is positive both for the near-term and long-term.

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