VRTX
Vertex Pharmaceuticals Incorporated
$476.39
Platform & Compounding FCF
80%
Two-stage FCF DCF
Mild
·
Conviction
Overvalued
Trading 6.9% above fair value
You pay
$476.39
Bear
$273.74
Fair
$445.71
Bull
$645.98
Bear
$273.74
-42.5%
10% stage 1 growth, 11% discount
Fair
$445.71
-6.4%
17% stage 1 growth, 11% discount
Bull
$645.98
+35.6%
22% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (17% base case)
Terminal Value % of EV
44%
Implied Market Multiple
44.1x
Market is pricing in (growth)
19.5%
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 $547.93 from 56 analysts, using a 35% weight on analyst consensus. That produces an estimated intrinsic value of $445.71 per share.
Warnings
Wall Street's average price target is $547.93 (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