Vertex Pharmaceuticals (NASDAQ:VRTX) is set to release its earnings on Monday, May 5, 2025. For those trading based on events, analyzing historical stock behavior around earnings announcements can be advantageous. In the past five years, VRTX has recorded a positive one-day return after earnings in 58% of instances. When the return is positive, the median return stands at 3.0%, reaching a maximum positive return of 9.0%.
This upcoming earnings report is projected to reveal $4.29 in earnings per share and $2.86 billion in sales, according to consensus predictions. This is in comparison to the previous year’s same quarter, which recorded earnings of $4.76 per share on sales of $2.69 billion.
The market’s response will significantly hinge on how the actual results stack up against these consensus estimates and the broader market expectations. Nonetheless, past data provides insights into possible trading tactics. One strategy involves evaluating the historical likelihood of positive returns and taking a position before the earnings announcement. Alternatively, traders might assess the relationship between immediate post-earnings returns and medium-term performance to guide their positions after the results are announced.
From a fundamental standpoint, VRTX currently holds a market capitalization of $130 billion. The company’s revenue over the prior twelve months amounted to $11 billion, and it demonstrated operational profitability with $4.4 billion in operating profits, although it recorded a net loss of $-536 million.
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VRTX Stock Historical Probability of Positive Post-Earnings Return
A few insights into one-day (1D) post-earnings returns:
- 19 earnings data points have been documented over the last five years, with 11 returns being positive and 8 negative one-day (1D) returns recorded.
- Overall, positive 1D returns occurred approximately 58% of the time.
- Nevertheless, this percentage drops to 50% when considering data from the last 3 years instead of the previous 5.
- The median of the 11 positive returns is 3.0%, while the median of the 8 negative returns is -3.1%.
Further information regarding 5-Day (5D) and 21-Day (21D) returns post earnings is compiled along with statistics in the table below.
VRTX Stock Correlation Among 1D, 5D, and 21D Historical Returns
A relatively less risky way (though ineffective if the correlation is low) is to analyze the correlation between short-term and medium-term returns after earnings, identify the pair with the highest correlation, and carry out the appropriate trade. For instance, if 1D and 5D demonstrate the highest correlation, a trader can position themselves “long” for the next 5 days if the 1D post-earnings return is positive. Here is some correlation data based on 5-year and 3-year (more recent) history. Note that the correlation 1D_5D denotes the relationship between 1D post-earnings returns and subsequent 5D returns.
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