Imagine that you are a financial manager researching investments for your client. Think of a friend or a family member as a client. Define her or his characteristics and goals such as an employee or employer, relatively young (less than 40 years) or close to retirement, having some savings/property...
imagine that you are a financial manager researching
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financial research report part 1
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Financial Research Report
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Running head: FINANCIAL RESEARCH REPORT: VERTEX PHARMACEUTICALS INC.
Part 1 – Financial Research Report: Vertex Pharmaceuticals Incorporated
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, FINANCIAL RESEARCH REPORT: VERTEX PHARMACEUTICALS INC. 1
Financial Research Report: Vertex Pharmaceuticals Inc.
The rationale for selecting Vertex Pharmaceuticals Inc.
As a financial manager, it is my responsibility to research investments that I would advise
my clients to buy. The publicly-traded company that I will advise my client to invest in is Vertex
Pharmaceuticals Inc. Headquartered in Boston; Vertex is a global biopharmaceutical company
that that invests in scientific innovation to create transformative medicines for people with
serious diseases. Founded in 1989 in Cambridge, Massachusetts, the biotechnology company
boasts of four approved medicines that treat the underlying cause of cysts fibrosis, which is a
rare, life-threatening genetic disease and has several ongoing clinical and research programs in
CF ("We Are Vertex," n.d.).
Financially, the company appears to be on a clear path to deliver strong revenue and
earnings growth over the next decade. While a high Price-per-earnings ratio might mean a stock
is overvalued, that is not the case for Vertex despite the P/E standing at 54.53. Instead, the high
P/E indicates that investors expect higher growth from the company compared to the
overall market. This year alone, shares of Vertex are up 9.7% and 29.3% over the past 12 months
(See Table 1 in appendices). This is well over the S&P 500 Health Care Sector index, which is
up 1.7% this year and 14.4% over the past 12 months. According to Benzinga Editorial (2012),
most investors advise that one should look to the only invest in companies that have
tremendously-established brands or that have extremely strong emerging brands. In my view,
despite Vertex being around for over 30 years, I would consider it an emerging brand, especially
with regards to biotechnology. Besides, considering that the lifeblood of any business is cash. A
look at the company’s balance sheet indicates that Vertex is poised for a bright future. That is
because its strong cash flow growth would allow it to undertake both strategic and opportunistic
projects without raising expensive outside funds. Currently, the company boasts of a 204% year-
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