Stocks edged lower this morning to kick off the first trading session of August after capping off a month of solid gains. The Dow rose 6.7% in July, the S&P 500 added 9.1%, and the Nasdaq Composite, while still in bear market territory, is up roughly 12.4%.
“We are seeing a relief rally in the stock market, as pessimism reached extreme levels and as longer-term interest rates have been coming back down. We believe the rally will last until later in the summer, but as stock prices rebound and it becomes increasingly clear that we are headed for a more typical recession (e.g., one with higher unemployment and nominal GDP dropping close to zero or negative), markets will again have another selloff,” said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance.
Regardless of what’s happening elsewhere in the market, biopharma is a great place to look for stocks to pack into your portfolio because there’s always an illness that can be treated more effectively in the future than it is being treated today.
Our trade alert features an established drug maker with an excellent approval history. Their treatments have been widely trusted for years, and currently, they have multiple promising projects in the pipeline.
Vertex Pharmaceuticals (VRTX) is the undisputed leader when it comes to cystic fibrosis therapies. The company’s portfolio of approved CF drugs will deliver at least an estimated $8.4 billion this year, made possible by intense market penetration and decades-long devotion to research and development in the space.
So far, the company has been highly accountable, proving to regulators that its products are effective and safe for a more comprehensive population of patients. It has also remained enormously profitable and continued to expand revenue within the CF market at a steady pace.
Suppose management’s plans for expanded approvals for younger age cohorts continue to come to fruition over the next few years. In that case, Vertex will eventually be treating as many as 90% of all people with CF. That means investors can look forward to a steadily increasing flow of new revenue and expanded approvals, which should significantly support the stock’s price.
Furthermore, the company is moving its pipeline beyond CF with a handful of mid-stage clinical programs for pain relief, kidney disease, and genetic hematologic disorders like sickle cell disease. In other words, even if it eventually completely corners the entire market for CF therapies, there will still be other growth opportunities.
Of 26 analysts offering recommendations for VRTX, 18 give the stock a Buy rating, and 9 rate it a Hold. There are no Sell ratings. It seems likely that Vertex will reward patient investors as the steadily growing biopharma company seems ripe for expansion for years to come.
Should you invest in Vertex right now?
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