DCF Studio

    VRTX · NMS · Healthcare

    Vertex Pharmaceuticals Incorporated

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 348.55

    Market price

    USD 553.15

    Implied upside

    -37.0%

    10-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · Price 2026-11-02 · Accounts to 2025-12-31

    AdjustedCapital expenditure runs at 3.2% of revenue against depreciation of 1.8%. A perpetuity has to be a steady state, so the forecast tapers capex to maintenance at depreciation plus the reinvestment terminal growth requires (g/ROIC of NOPAT), and the terminal year carries on from there. The bridge is shown under Terminal Value.

    Current EV/EBITDA of 28.5x sits outside a defensible 3-20x band, so the exit multiple is capped at 20.0x. A multiple that far out usually means EBITDA is the wrong denominator for this business.

    Value Per Share

    Perpetuity growth
    USD 348.55-37.0%
    Exit multiple
    USD 422.44-23.6%
    Market price
    USD 553.15

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn2bn5bnFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35CAGR
    RevenueUSD 13.3bnUSD 14.6bnUSD 15.9bnUSD 17.2bnUSD 18.4bnUSD 19.6bnUSD 20.6bnUSD 21.5bnUSD 22.3bnUSD 22.8bn+6.2%
    EBITUSD 4.0bnUSD 4.4bnUSD 4.8bnUSD 5.2bnUSD 5.6bnUSD 6.0bnUSD 6.3bnUSD 6.5bnUSD 6.8bnUSD 6.9bn+6.2%
    NOPATUSD 3.3bnUSD 3.6bnUSD 3.9bnUSD 4.2bnUSD 4.5bnUSD 4.8bnUSD 5.1bnUSD 5.3bnUSD 5.5bnUSD 5.6bn+6.2%
    Add depreciation & amortisationUSD 236.6mUSD 260.1mUSD 283.6mUSD 306.5mUSD 328.4mUSD 348.8mUSD 367.3mUSD 383.3mUSD 396.5mUSD 406.4m+6.2%
    Less capital expenditureUSD -430.3mUSD -498.3mUSD -570.6mUSD -646.4mUSD -724.4mUSD -803.2mUSD -881.2mUSD -956.7mUSD -1.0bnUSD -1.1bn+10.9%
    Capex, % of revenue3.2%3.4%3.6%3.8%3.9%4.1%4.3%4.4%4.6%4.8%-
    Less increase in working capitalUSD -265.0mUSD -273.5mUSD -272.6mUSD -266.4mUSD -254.8mUSD -237.5mUSD -214.6mUSD -186.2mUSD -152.9mUSD -115.2m-8.8%
    Free cashflow to firmUSD 2.8bnUSD 3.1bnUSD 3.3bnUSD 3.6bnUSD 3.9bnUSD 4.1bnUSD 4.3bnUSD 4.5bnUSD 4.7bnUSD 4.8bn+6.2%
    Discount factor0.96650.90290.84350.78800.73620.68770.64250.60020.56070.5238-
    Present valueUSD 2.7bnUSD 2.8bnUSD 2.8bnUSD 2.8bnUSD 2.8bnUSD 2.8bnUSD 2.8bnUSD 2.7bnUSD 2.6bnUSD 2.5bn-
    Present Value Of The ForecastUSD 27.4bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.89%US 10-year Treasury (^TNX), 2026-11-02
    Equity risk premium4.23%Damodaran, January 2026
    Beta0.518Reported 0.280, pulled toward 1.0 (Blume)
    Cost of equity7.08%Risk-free + beta x equity risk premium
    Cost of debt5.29%Risk-free + 40bp, the spread for a AAA rating at 342.4x interest cover. Book interest / average debt was lower, at 0.7%.
    Market capitalisationUSD 140.2bn98.6% of capital
    Total debtUSD 2.0bn1.4% of capital, book value as a proxy
    Tax rate19.4%Effective, capped at statutory
    WACC7.04%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 348.55

    68% of EV

    Forecast FCFF, final year
    USD 4.8bn
    Capex at depreciation, working capital in reinvestment
    USD 5.6bn
    Less reinvestment at g/ROIC (12.7% of NOPAT)
    USD -714.0m
    Capitalised
    USD 4.9bn
    ROIC (reported)
    19.7%
    Terminal value, undiscounted
    USD 110.6bn
    Terminal value, discounted
    USD 57.9bn
    Enterprise value
    USD 85.3bn
    Less net debt
    USD -4.6bn
    Equity value
    USD 89.9bn

    Exit at 20.0x EBITDA

    Value per shareUSD 422.44

    74% of EV

    Terminal value, undiscounted
    USD 147.0bn
    Terminal value, discounted
    USD 77.0bn
    Enterprise value
    USD 104.4bn
    Less net debt
    USD -4.6bn
    Equity value
    USD 109.0bn

    Spread between methods: 19%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    5.04%499.00546.95614.32715.36882.81
    6.04%389.67413.24443.83484.93542.71
    7.04%320.01332.74348.55368.59394.65
    8.04%271.80279.03287.77298.48311.81
    9.04%236.52240.68245.65251.63258.90

    Outlined: this model. Green text: above today's price of 553.15. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputActualModelImplied
    Revenue growth, a year10.4%6.6%12.5%
    EBIT margin47.6%30.4%48.7%
    Discount rate-7.0%5.3%
    Download as Excel

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    Yahoo Finance and RBA data. General information, not advice. Methodology.