Following a punishing 2022, it’s reasonable to expect that the situation won’t get any better, especially with a recession hanging over our heads this 2023. Hence, industries widely known to be “resilient,” “stable,” and “durable” will sustain their momentum and continue to gain more investors. Meanwhile, sectors typically associated with “buzzy” updates will struggle to keep their businesses afloat.
That means the best businesses to put your money in are those where people have no other recourse but to spend regardless of the economic situation. With this in mind, investors are projected to load up on healthcare stocks to help them weather the incoming financial storm.
Actually, this has been the trend since the pandemic started, with the Health Care Select Sector SPDR ETF (XLV) only falling by 4.2% in 2022. It’s still good news, especially in light of significant tailwinds, like wars, inflation rates, and political turmoil. Looking at the performance of this sector, it’s evident that people will still seek medical care no matter what. That makes the healthcare sector the ideal combo of a reasonable valuation and defense.
Among the names in this segment, finding a company that performed better than Vertex Pharmaceuticals (VRTX) would be difficult. This business has swum against the tide throughout 2022, with shares climbing amid the struggles of the S&P 500. While Vertex already presented solid fundamentals this year, it could perform even better in 2023.
Vertex’s shares have risen by 32% year to date. In contrast, the S&P 500 has shown a 19% decline. What makes Vertex different from its competitors? Here is the short answer. The company is equipped with the tools to continue delivering impressive financial results in both the short and long terms.
The next couple of years will see Vertex continue to lean on its high-performing lineup of treatments that target cystic fibrosis (CF). This rare genetic condition results in digestive issues and affects the internal organs of patients.
Vertex has a virtual monopoly of this highly lucrative market, being the sole game in town targeting not only CF but the underlying conditions of this rare disease.
Actually, Vertex has been aggressive in expanding its CF franchise. Before 2022 wrapped up, the company submitted its Investigational New Drug application for another CF treatment called VX-522. This is an mRNA-based therapy, which was already cleared by the US Food and Drug Administration.
The CF market has massive potential, which Vertex has yet to explore fully. By 2025, the CF market is estimated to hit a whopping $13.9 billion. Considering that Vertex is the only drugmaker making an impact on this condition, this could translate to an even bigger revenue stream for the company.
Vertex’s lineup of CF treatments has enabled the company to start creating and developing new programs that hold the potential to become blockbusters. Thus far, the company has developed a pipeline of candidates for gene-editing and acute pain treatments.
To date, Vertex and its co-developer, CRISPR Therapeutics (CRSP), are awaiting regulatory approval for their one-time gene-editing therapy called Exa-cel. This treatment has the potential to cure two rare genetic blood diseases, namely, sickle cell disease and transfusion-dependent beta-thalassemia. Apart from being able to possibly treat these conditions, the capability of Exa-cel to eliminate the necessity for transfusions makes it incredibly impressive.
Another potential top-selling treatment for Vertex is VX-548, which targets neuropathic and acute pain. This is a non-opioid alternative that the company hopes to offer in an effort to curb the debilitating opioid addiction in the US. VX-548 is slated to undergo Phase 3 trials in the first half of 2023.
Overall, Vertex is an excellent buy for investors looking for a safe and solid stock in the healthcare industry. It has proven itself to be an extremely profitable company over the past decade, and its pipeline of potential treatments queued for clinical trials are indicative of its ability to grow beyond its CF program. Given Vertex’s success over the years, the business potential, and the current price, this company can quickly become a crowd favorite in 2023.
