This pharmaceutical company is forecast to continue growing at double-digit rates over the next five years. Its positive earnings surprises have elevated the shares to a ‘Buy’ rating at Zacks.
Top Picks Update
Vertex Pharmaceuticals (VRTX)
From Cabot Undervalued Stocks Advisor
Vertex Pharmaceuticals (VRTX) is a biotech company, prominent for its world-leading treatments for cystic fibrosis.
I recommended VRTX in anticipation of a rebound back to 140, where it briefly traded in July 2015, and where it will likely meet significant price resistance. (There are people who bought the stock near 140, and they’ve been waiting for two years to recoup their principal. Many of them will sell, and the selling pressure will push the share price down.) The stock is up about 80% year-to-date.
Here’s a less-likely scenario: There is currently some excitement among drug stocks, pertaining to a potential new healthcare bill in Congress. If such a bill passes, it could push drug stocks higher, including VRTX. At some point thereafter, I would expect a pullback to 140, because it’s an important price point for the stock.
Traders should sell around 139. Long-term buy-and-hold investors should hold VRTX, because it’s still an undervalued aggressive growth stock. Bargain hunters should watch for an opportunity to buy on pullbacks below 125.
Lastly, VRTX is a potential takeover target. The profit situation is outstanding, and big pharmaceutical companies are often looking for ways to boost their slow earnings growth.
Crista Huff, Cabot Undervalued Stocks Advisor, www.cabotwealth.com, 978-745-5532, June 23, 2017