VRTX
Vertex Pharmaceuticals Incorporated
$434.52
Platform & Compounding FCF
80%
Two-stage FCF DCF
Mild
·
Conviction
Fair Value
Trading 10.7% below fair value
You pay
$434.52
Bear
$301.47
Fair
$486.66
Bull
$700.39
Bear
$301.47
-30.6%
10% stage 1 growth, 11% discount
Fair
$486.66
+12.0%
16% stage 1 growth, 11% discount
Bull
$700.39
+61.2%
21% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (16% base case)
Terminal Value % of EV
44%
Implied Market Multiple
33.7x
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 $552.80 from 56 analysts, using a 35% weight on analyst consensus. That produces an estimated intrinsic value of $486.66 per share.
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