On February 10, 2025, Vertex reported consolidated financial results for the fourth quarter and full year ended December 31, 2024, and provided its FY2025 financial guidance. Product revenue of $2,912.0 million for the fourth quarter and of $11,020.1 million for the year ended December 31, 2024, exceeded Kingswood Capital estimates of $2,775.0 million and $10,883.1 million by 4.9% and 1.3%, respectively. However, GAAP EPS of $3.50 for the quarter and $(2.08) for FY 2024 fell 12.5% and 24.5% short of our forecast of $4.00 and $(1.57).These numbers reflect higher than anticipated R&D expenses and effective tax rates.

Vertex issued FY 2025 revenue guidance of $11.75-12.0 billion, reflecting expectations for continued growth in cystic fibrosis, continued uptake of CASGEVY for sickle cell disease and transfusion-dependent beta thalassemia, as well as early contributions from the commercial launch of JOURNAVX for acute pain. The company predicted combined GAAP R&D andSG&A expenses of $5.55-$5.70 billion (including approximately $100 million of acquired in-process R&D [AIPR&D] expenses), as well as a non-GAAP effective tax rate of 20.5%-21.5%.

Vertex continues efforts to diversify its product base byadvancing multiple development programs into late-stage clinical trials and toward commercialization. Phase 3 trials are ongoing in chronic pain, APOL1-mediated kidney disease, IgA nephropathy (IgAN), and Type 1 diabetes.

Sustained execution has helped Vertex achieve both a strong operating margin and cash position, allowing continued, significant investments in its pipeline and commercial capabilities. We reiterate our BUY rating and $500 price target on the stock in light of ongoing diversification of the company’s revenue base, disease areas of focus, R&D pipeline, and operating geographies, which we expect will build long-term value for shareholders.