Stocks to Consider Amid Recessionary Conditions
In the dynamic world of pharmaceuticals, one company stands out for its remarkable blend of biotech innovation and pharmaceutical-scale commercialization - Vertex Pharmaceuticals.
Based in the United States, Vertex has amassed a cash stockpile of $8.2 billion as of March 31, 2022, a testament to its financial strength. This biotech company specializes in groundbreaking therapies, particularly for rare genetic diseases such as cystic fibrosis (CF), showcasing deep expertise in gene and protein-targeted biology.
Unlike typical small biotech startups that exit early via acquisition, Vertex has built a robust end-to-end model—from discovery to regulatory approval to global commercialization—capturing more value internally. The company invests heavily in R&D with a focus on transformative biologics rather than incremental chemical modifications.
Vertex's strategic collaborations with larger pharma firms leverage partnerships while maintaining autonomy over late-stage development and market access, thus combining biotech innovation agility with Big Pharma’s execution strengths.
In the event of a potential recession, Vertex's drugs treating CF are less likely to be abandoned by physicians. The company's four CF drugs are the only ones approved for treating the underlying cause of CF. This recession-resistant nature, coupled with Vertex's financial strength, makes it a top stock to consider.
As of now, the official declaration of a recession does not necessarily mean the U.S. is in a recession at the current time. However, if a recession has begun, Vertex checks off practically every box for what you'd want when buying a stock. The stock market tends to perform dismally during recessionary periods, but Vertex's shares have soared nearly 30% despite the poor performance of the market so far this year.
Moreover, Vertex's price-to-earnings-to-growth (PEG) ratio is only 0.41, considered an attractive valuation. Over 40% of Vertex's total revenue is expected to be profit. In Q1, the company's revenue jumped 22% year over year, and its earnings rose 17%.
Looking ahead, Vertex expects to file later this year for regulatory approvals of exa-cel in treating sickle cell disease and transfusion-dependent beta-thalassemia. The company is also developing experimental drugs like VX-147, targeting APOL1-mediated kidney disease, and VX-548, which could be a game-changer in treating acute pain.
Vertex's patents for its best-selling and most advanced CF drug provide protection through 2037, ensuring a steady stream of revenue in the coming years. With its strong financial position, innovative pipeline, and recession-resistant drugs, Vertex Pharmaceuticals remains a compelling investment opportunity, regardless of the economic climate.
- Despite the potential for a recession, Vertex Pharmaceuticals remains a top stock to consider due to its financial strength, innovative pipeline, and recession-resistant nature, as evidenced by its drugs treating cystic fibrosis.
- In the stock-market, Vertex's shares have soared nearly 30% despite the poor performance of the market so far this year, indicating the company's resilience and potential for further growth.
- With its strong financial position, attractive valuation indicated by the low PEG ratio, and expectation for future regulatory approvals, Vertex Pharmaceuticals continues to be a compelling investing opportunity in the field of finance and biotechnology.
