Health care and pharmaceutical stocks often hold up a little better and longer when the stock market hits a rough patch. Vertex Pharmaceuticals (VRTX) is a stock to watch due to its strong earnings and drug portfolio amid a challenging stock market.
XVertex Pharmaceuticals is the stock in spotlight today. The company is a leader in the manufacture of drugs for treating cystic fibrosis. It also has other products in late-stage clinical development that target sickle cell disease, Type 1 diabetes and certain genetically caused kidney diseases.
Vertex Has Strong Technical Rating, Earnings
Vertex stock is in the fourth week of a new flat base and has just retaken its 50-day moving average, according to MarketSmith. The stock broke out briefly from a cup-with-handle base in June and has been trading slightly above 277 since late August.
Vertex has perfect Composite and EPS Ratings of 99, and its RS Rating is a strong 95. Its SMR Rating of A shows the company's strong sales and profitability and ability to use shareholders' capital effectively.
The Boston-based company is ranked No. 3 in the Medical-Biomed/Biotech group, according to IBD Stock Checkup.
The drugmaker has a robust earnings and revenue record over the four most recent quarters. For its quarter ended June 30, revenue of $2.2 billion showed a 22% increase from $1.8 billion for the same quarter in 2021. Earnings per share were $3.13 vs. 26 cents for the same year-ago period. The company raised its full-year guidance from $8.6 billion to $8.8 billion.
Vertex is seeing strong demand for its cystic fibrosis treatment Trikafta. In 2021, it launched the treatment for children age 6 to 11.
More funds have been buying shares of Vertex over the past four quarters. Greater institutional interest shows that fund managers believe in the longer-term fundamental and technical outlook for Vertex. But the stock's lower Accumulation/Distribution Rating of C+ should tell investors that funds are acquiring the stock at a slower than moderate pace just now. The market outlook is uptrend is under pressure, and that will likely impact stock performance in the near term at least.
Along with Stock Spotlight, Vertex is on two other IBD stock lists: the IBD Big Cap 20 and Leaderboard.
Several ETFs and mutual funds hold the stock, including the VanEck Biotech ETF (BBH) and the iShares Biotechnology ETF (IBB).
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