VRTX
Vertex Pharmaceuticals Incorporated
$501.95
Platform & Compounding FCF
80%
Two-stage FCF DCF
Strong
·
Conviction
Overvalued
Trading 54.3% above fair value
You pay
$501.95
Bear
$216.15
Fair
$325.38
Bull
$444.82
Bear
$216.15
-56.9%
9% stage 1 growth, 11% discount
Fair
$325.38
-35.2%
14% stage 1 growth, 11% discount
Bull
$444.82
-11.4%
19% stage 1 growth, 11% discount
Adjust Assumptions
14.2%
11.0%
3.0%
Key Value Driver
FCF growth rate (14% base case)
Terminal Value % of EV
42%
Implied Market Multiple
46.3x
Market is pricing in (growth)
20.2%
vs 14.2% base
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (56 analysts)
$573.50
Divergence from AlphaVal
43%
Summary
Using a two-stage FCF DCF with 14% growth decelerating over 15 years, discounted at 11%, the base-case intrinsic value is $325.38 per share.
Warnings
Wall Street's average price target is $573.50 (from 56 analysts). Our estimate is 43% 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