Vertex Pharmaceuticals Incorporated (VRTX)
Quantitative Summary
DeterministicAt 26.5x earnings — a 59% discount to the sector average of 65.2x — VRTX is in the lower valuation range. Financial health is average: Piotroski 6/9, Altman Z 11.7. DCF fair value of $195 implies 56% downside based on model assumptions. Beneish M-Score of -2.20 exceeds the -2.22 academic threshold — earnings quality may warrant further review.
Generated deterministically from quant metrics and financial statements. Not a recommendation.
Algorithmic Teardown
AI-GeneratedVertex Pharmaceuticals demonstrates robust fundamental quality characterized by a significant 10.0% spread between its return on invested capital of 16.9% and weighted average cost of capital, indicating efficient value creation. The DuPont decomposition reveals that the 21.2% return on equity is primarily driven by exceptional net margins at 32.9%, supported by moderate leverage rather than asset turnover intensity. This financial strength is corroborated by a Piotroski F-Score of 6/9, an Altman Z-Score of 12.8 suggesting minimal bankruptcy risk, and a Beneish M-Score of -2.20 that points to low earnings manipulation concerns, despite the company's growth tilt evident in its value factor exposure.
Valuation metrics present a divergence between market pricing and discounted cash flow models; while the current P/E ratio of 28.7x trades slightly below the sector average of 30.8x, suggesting relative affordability compared to peers, the DCF analysis implies a fair value of $244 with an upside potential of -45.3%. This significant discount reflects market skepticism regarding the implied future free cash flow growth rate of only 6.1% over ten years, which may be insufficient to justify current equity levels given the firm's high-margin profile. The negative Fama-French alpha of -8.38% annually further indicates that recent returns have underperformed risk-adjusted expectations relative to the market and size factors.
Risk assessment is complicated by conflicting signals between strong balance sheet metrics and deteriorating insider sentiment, highlighted by $75 million in net selling over the last 90 days. Additionally, factor analysis reveals a Profitability Factor (RMW) of -0.485, indicating recent weakness relative to other profitable firms within the model's universe, while the negative HML score confirms the stock maintains its growth classification despite valuation compression. These data points collectively suggest that while the underlying economics remain sound with high margins and low distress risk, near-term performance has lagged factor benchmarks and internal confidence appears eroded based on insider activity.
Generated by LLM from quantitative data inputs. May contain inaccuracies. Not investment advice.
DCF Sandbox
Interactive5-year two-stage DCF. Terminal growth 3%. Default sliders match the pre-computed base case. Drag to explore scenarios. Not investment advice.
The growth rate the market implicitly expects over the next 10 years to justify today's price. Compare with historical growth of 9% YoY revenue.
Sensitivity Matrix
| TG ↓ / WACC → | 6% | 7.9% | 9.9% |
|---|---|---|---|
| 2% | $244 | $170 | $132 |
| 3% | $308 | $195 | $144 |
| 4% | $436 | $232 | $160 |
Center = base case. Green = >10% upside, Red = >10% downside vs $425.09.
Pre-computed DCF: WACC=7.9%, terminal growth 3%. Fair value $195 (-55.8%). Not investment advice.
Valuation Context
Currently trading 4% below its 5-year average P/E of 29.6x.
Price Chart with Moving Averages
Technical Setup
AI GeneratedVertex Pharmaceuticals is currently trading above both its 50-day and 200-day simple moving averages, indicating a strong upward trend in the short to medium term; however, with the Relative Strength Index (RSI) at 54.5, suggesting it's neither overbought nor oversold, there isn't significant divergence between short- and long-term momentum indicators yet.
Quant Health Deep Dive
Profitability & Value Creation
DuPont Analysis — ROE Decomposition
Breaking down Return on Equity to see how the company generates its ROE — efficiency, margins, or leverage.
Balance Sheet Health
Insider Activity (Last 90 Days)
Open-market buys vs sells by company insiders. Source: yfinance.
Earnings Surprise History
EPS estimates vs actuals for the most recent reported quarters. Source: yfinance.
Risk Profile
Sharpe = risk-adjusted return (higher is better). Max drawdown = largest peak-to-trough decline. 1,200+ trading days.
Underwater (Drawdown from Peak)
How far below the all-time high the price has been over time. Deeper = more pain for holders.
Rolling 60-Day Beta vs S&P 500 (VOO)
How the stock's sensitivity to market moves changes over time. β > 1 = more volatile than the market.
Fama-French 5-Factor Exposure
Academic factor model decomposition — what's really driving this stock's returns.
Fama-French 5-Factor Model. Data: Kenneth French Data Library. Regression over 3 years of daily returns.
Fundamentals
Passive Flow Attribution
ETF Draft EffectWhen investors buy or sell ETFs like IBB or XLV, the fund manager is mechanically forced to buy or sell VRTX shares regardless of Vertex Pharmaceuticals Incorporated's individual fundamentals. We estimate $16.1B of passive capital is structurally linked to VRTX through 8 tracked ETFs. This substantial passive exposure means that ETF inflows and outflows — not company fundamentals — can dominate daily volume on this stock.
Passive exposure = Σ (ETF AUM × stock weight in ETF) across 8 tracked ETFs. Actual passive ownership is larger (includes mutual funds). Not investment advice.
ETF Contagion Visualizer
Simulate a price drop in Vertex Pharmaceuticals Incorporated to visualize passive redemption contagion across ETFs and collateral stocks.
If Vertex Pharmaceuticals Incorporated (VRTX) experiences a significant drawdown, ETF redemptions can create collateral selling pressure on co-held stocks. Our model identifies ELI LILLY + CO (LLY) as the most exposed collateral stock, sharing 2 ETFs with VRTX. This is the "Passive Contagion" effect described in the Inelastic Market Hypothesis.
Contagion model based on shared ETF exposure and constituent weights across 27 tracked ETFs. Estimated selling pressure is a simplified model — actual impact depends on market liquidity, ETF redemption mechanics, and market-maker activity.
VRTX Ownership Dynamics
Passive funds hold 1 in every 7 VRTX shares, reducing daily market volatility.
Vertex Pharmaceuticals Incorporated (VRTX) exerts measurable gravity on the passive index market, currently representing 7.2% of the IBB (IBB) and 2.1% of the State Street Health Care Select Sector SPDR ETF (XLV). Across 28 tracked ETFs, approximately 37M shares (14.5% of float) are held by passive funds and rarely trade on the open market. This level of passive ownership means index rebalances can create outsized volume events.
ETFs with Highest VRTX Exposure
Float lock-up computed from 28 ETFs tracked by SecuritiesDB. Actual passive ownership is higher (includes mutual funds, pension funds, etc.).
VRTX Institutional Volume Profile
252-day volume distribution by price level. The Point of Control (POC) marks — the price where the most institutional volume transacted — an implicit support/resistance floor.
The highest-volume price zone for Vertex Pharmaceuticals Incorporated over the past year sits near $446.12 (10% of 252-day volume). The current price of $425.09 sits 4.7% below the POC — suggesting potential mean-reversion upside if institutional demand reasserts at this level.
Volume Profile computed from 252 trading days of OHLCV data. Volume allocated to price bins proportionally based on daily high-low range. Not investment advice.
VRTX Capital Efficiency
How efficiently does Vertex Pharmaceuticals Incorporated convert operating profits into free cash? The FCF Conversion ratio measures the gap between accounting earnings and real cash generation.
Vertex Pharmaceuticals Incorporated converts 66% of its EBITDA into free cash flow, an exceptional conversion rate indicating an asset-light business model with minimal capital reinvestment drag. The positive ROIC-WACC spread of 9.0% confirms that reinvested capital creates shareholder value.
Capital efficiency = Free Cash Flow ÷ EBITDA. Reinvestment = (EBITDA − FCF) ÷ EBITDA. Metrics from latest annual filings. Not investment advice.
Fails-to-Deliver (FTD) History
SEC-reported settlement failures. Elevated FTDs can indicate high short-selling pressure, operational settlement issues, or naked shorting activity.
| Date | Failed Shares | Close Price | Notional Value |
|---|---|---|---|
| 2026-05-07 | 1 | $427.65 | $427.65 |
| 2026-05-06 | 214 | $424.36 | $90,813.04 |
| 2026-05-04 | 14 | $423.92 | $5,934.88 |
| 2026-04-24 | 1,290 | $435.10 | $561,279 |
| 2026-04-23 | 1 | $437.67 | $437.67 |
| 2026-04-16 | 2,143 | $441.70 | $946,563.1 |
| 2026-04-15 | 14 | $444.28 | $6,219.92 |
| 2026-04-08 | 1 | $431.86 | $431.86 |
| 2026-03-30 | 42,186 | $433.07 | $18.3M |
| 2026-03-25 | 5,705 | $448.62 | $2.6M |
| 2026-03-23 | 2,095 | $454.00 | $951,130 |
| 2026-03-17 | 40,515 | $466.10 | $18.9M |
| 2026-03-13 | 341 | $478.13 | $163,042.33 |
| 2026-02-25 | 300 | $487.43 | $146,229 |
| 2026-02-24 | 300 | $481.01 | $144,303 |
| 2026-02-20 | 1,216 | $469.27 | $570,632.32 |
| 2026-02-18 | 72 | $477.32 | $34,367.04 |
| 2026-02-17 | 14,013 | $491.47 | $6.9M |
| 2026-02-13 | 300 | $465.02 | $139,506 |
| 2026-02-12 | 3,833 | $461.24 | $1.8M |
| 2026-02-09 | 2,800 | $477.92 | $1.3M |
| 2026-02-04 | 915 | $465.61 | $426,033.15 |
| 2026-02-02 | 200 | $469.90 | $93,980 |
| 2026-01-16 | 134 | $438.92 | $58,815.28 |
| 2026-01-13 | 1 | $460.59 | $460.59 |
| 2026-01-09 | 18 | $469.68 | $8,454.24 |
| 2026-01-06 | 136 | $448.80 | $61,036.8 |
| 2026-01-05 | 791 | $452.13 | $357,634.83 |
| 2025-12-31 | 10 | $453.74 | $4,537.4 |
| 2025-12-29 | 1,000 | $462.90 | $462,900 |
Source: SEC Regulation SHO FTD data. Data is reported with a ~30 day delay. High FTD quantities relative to average daily volume may indicate settlement stress.
Price Correlations
Statistical correlation of daily returns with other stocks. High correlations indicate stocks that move together; negative correlations can offer diversification.
| Peer | 252-Day (1Y) | 126-Day (6M) | Direction |
|---|---|---|---|
| WTGXX | NaN | NaN | |
| TDG | 0.434 | 0.122 | Moderate |
| AMGN | 0.401 | 0.487 | Moderate |
| ABBV | 0.389 | 0.447 | Moderate |
| BMY | 0.389 | 0.459 | Moderate |
| GILD | 0.389 | 0.447 | Moderate |
| CRSP | 0.366 | 0.285 | Moderate |
| HSIC | 0.346 | 0.146 | Moderate |
| LLY | 0.345 | 0.407 | Moderate |
| AZN | 0.334 | 0.299 | Moderate |
Pearson correlation of daily log returns. 252d ≈ 1 trading year. Computed from price history. Not investment advice.
Compare VRTX to Peers
Quant metrics computed deterministically from financial statements and price data. Updated: 2026-06-02.
SecuritiesDB provides programmatic data aggregation for informational purposes only. None of the metrics, summaries, or algorithmic flags constitute a recommendation to buy or sell any security.