Do You Believe in the Upside Potential of Vertex Pharmaceuticals (VRTX)?

PGIM Jennison Health Sciences Fund released its first quarter 2025 investor letter. A copy of the letter can be downloaded here. The S&P 1500 Health Care Index returned 5.5% in the first quarter, outperforming the S&P 500’s -4.3% return. Biotechnology and healthcare providers and services surpassed the Index in performance during this quarter. Pharmaceuticals, healthcare technology, and medtech also saw gains but lagged the Index. Conversely, life sciences tools and services declined over the same period. During the quarter, the Fund experienced a loss in value, underperforming the Index. Stock selection in biotechnology was the primary cause of the fund's relative underperformance. Stock selection in pharmaceuticals was another area of relative weakness. Whereas stock selection in health care providers, biotechnology, and underweight to life sciences tools & services contributed to better relative results. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its first quarter 2025 investor letter, PGIM Jennison Health Sciences Fund highlighted stocks such as Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX). Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) is a biotechnology company focusing on developing and commercializing therapies for treating cystic fibrosis (CF). The one-month return of Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) was 1.75%, and its shares lost 5.47% of their value over the last 52 weeks. On July 7, 2025, Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) stock closed at $459.41 per share, with a market capitalization of $117.975 billion.

PGIM Jennison Health Sciences Fund stated the following regarding Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) in its first quarter 2025 investor letter:

"Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) is a commercial stage biopharmaceutical with a core franchise of small molecule cystic fibrosis transmembrane conductance regulator (CFTR) modulators for cystic fibrosis (CF), a genetic and progressively fatal respiratory disease. VRTX has built a unique and unrivaled market position as the dominant market leader in CF, having created and expanded the market into a nearly $10B franchise and growing with the approval of their next-gen CF triple therapy, Alyftrek, which we believe will drive top-line growth and margin expansion in 2025 onwards. VRTX is also developing an acute and chronic pain franchise. VRTX received approval in acute pain expect this launch to begin to contribute in 2H 2025. Pain as a potentially mega blockbuster category is increasingly becoming evident following a 6/7 hit rate for VX-548 in clinical trials (as well as previous-gen asset VX-150 going 2/2 itself). While market development will need to be done, which is true for any new class of drugs, and expectations for acute pain are appropriately measured despite positive feedback, creating a good setup for the early quarters of launch. Beyond CF and pain, VRTX has focused its pipeline around genetically driven diseases with the potential for a transformative clinical benefit. It currently spans 5 disease verticals: sickle cell/beta thalassemia, type 1 diabetes, apolipoprotein L1 (APOL-1) kidney disease, IgA nephropathy (from the recent acquisition of Alpine Immune Sciences), and alpha-1 antitrypsin disease. VRTX has had another strong start to the year and has delivered positively on several clinical trial readouts, as well as beat Q4 revenue estimates and maintained 2025 guidance."

Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 60 hedge fund portfolios held Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) at the end of the first quarter, compared to 68 in the previous quarter. While we acknowledge the potential of Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the undervalued AI stock set for massive gains.

In another article, we covered Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) and shared the list of best fundamental stocks to buy according to hedge funds. In addition, please check out our hedge fund investor letters Q1 2025 page for more investor letters from hedge funds and other leading investors. While we acknowledge the potential of VRTX as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.