The healthcare sector has struggled to deliver worthwhile returns for investors since 2021, weighed down by several headwinds. Rising interest rates, challenges in the U.S. healthcare system, and the inherent risks of drug development have contributed to the sector's underperformance relative to the broader markets during this period.
However, some healthcare companies have bucked this downward trend in the post-pandemic era. Notably, Vertex Pharmaceuticals(NASDAQ: VRTX), which focuses on developing treatments for rare diseases, has significantly outpaced both its biotechnology peers and the S&P 500 since early 2022.
With the biotech company's stock already posting impressive gains of over 9% in early 2025, it's worth examining whether Vertex stock remains a compelling buy right now.
Image source: Getty Images.
Beyond cystic fibrosis at last
Vertex has built an empire in cystic fibrosis (CF) treatment, recently crowning its dominance with Alyftrek's approval last month. This latest CF drug adds even more firepower to a franchise already set to rake in approximately $10.9 billion last year.
With patents locked up into the 2030s and rivals nowhere in sight, Vertex's CF fortress looks impregnable. The company has methodically built this position through years of innovation, leaving would-be competitors in the dust.
But the real excitement lies in Vertex's push beyond CF, where years of investment are finally bearing fruit. All eyes are on Jan. 30, when the FDA weighs in on suzetrigine -- a potential game-changer for pain treatment that could offer an alternative to addictive opioids.
If approved, Wall Street analysts think suzetrigine will eventually generate blockbuster-level sales (greater than $1 billion annually). The core reason is the drug's novel mechanism of action and potential to be a viable alternative to highly addictive opioids.
The biotech also has a burgeoning gene therapy portfolio and pipeline. Working with CRISPR Therapeutics, Vertex has hit the ground running with Casgevy, its gene therapy for blood disorders.
Moreover, its experimental cell therapy for type 1 diabetes, Zimislecel (formerly VX-880), has shown remarkable early results, setting the stage for the therapy to enter a pivotal-stage trial.
Money talks
At 23.8 times forward earnings, Vertex stock trades in line with the broader S&P 500 index, which is at 23.6 times earnings -- a surprising valuation for a company with a dominant market share and high barriers to entry. Wall Street sees plenty of growth ahead, projecting an 8.2% jump in sales for 2025 as new products gain traction.
The balance sheet tells an equally compelling story: Vertex has $11.2 billion in cash and minimal debt, under $2 billion. This financial strength gives management ample room to pursue strategic deals or accelerate pipeline development as opportunities arise.
The company's modest market multiple, combined with robust growth prospects and a fortress-like balance sheet, reflects management's disciplined approach to building long-term value. Few biotechs can match Vertex's combination of growth potential and financial stability.
The road ahead
Vertex stands at an inflection point, with its CF franchise providing a rock-solid foundation while multiple late-stage programs could dramatically expand its reach. The next 12 months look particularly eventful, with decisions due on suzetrigine in acute pain, upcoming readouts in diabetes, and the continued rollout of Casgevy with partner CRISPR Therapeutics.
This wouldn't be Vertex's first successful reinvention, having already transformed from a hepatitis C player into the dominant force in CF treatment. The company's methodical expansion into pain, diabetes, and kidney disease follows this proven playbook of tackling complex diseases with high unmet needs.
With a bulletproof CF business generating a mountain of cash, minimal competition on the horizon in this key area, and multiple shots at billion-dollar markets, Vertex offers a compelling mix of stability and upside potential.
The bottom line is few companies can match its combination of established leadership in rare diseases and realistic pathways to significant market expansion, making Vertex stock a worthwhile buy in 2025.
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George Budwell has positions in CRISPR Therapeutics. The Motley Fool has positions in and recommends CRISPR Therapeutics and Vertex Pharmaceuticals. The Motley Fool has a disclosure policy.
