VRTX
Vertex Pharmaceuticals Incorporated
$477.36
Platform & Compounding FCF
80%
Two-stage FCF DCF
Mild
·
Conviction
Overvalued
Trading 7.0% above fair value
You pay
$477.36
Bear
$274.02
Fair
$446.16
Bull
$646.63
Bear
$274.02
-42.6%
10% stage 1 growth, 11% discount
Fair
$446.16
-6.5%
17% stage 1 growth, 11% discount
Bull
$646.63
+35.5%
22% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (17% base case)
Terminal Value % of EV
44%
Implied Market Multiple
44.2x
Market is pricing in (growth)
19.6%
vs 16.8% base
Summary
Our base-case estimate uses a two-stage discounted cash flow model based on free cash flow. We then blend that result with the average analyst price target of $549.21 from 56 analysts, using a 35% weight on analyst consensus. That produces an estimated intrinsic value of $446.16 per share.
Warnings
Wall Street's average price target is $549.21 (from 56 analysts). Our estimate is 29% below the consensus -- consider that gap carefully.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions