Is Vertex Pharmaceuticals, Inc. overvalued or undervalued?

As of 4 August 2025, the valuation grade for Vertex Pharmaceuticals, Inc. has moved from risky to attractive, indicating a positive shift in its investment appeal. Despite this improvement, the company appears to be overvalued, particularly when considering its Price to Book Value of 7.01 and the EV to Sales ratio of 9.91, which are significantly higher than those of its peers. For instance, Merck & Co., Inc. has a more favorable EV to EBITDA of 12.15, while Pfizer Inc. stands out with an EV to EBITDA of 11.07, suggesting that Vertex may be priced too high relative to its earnings potential.
In terms of recent performance, Vertex has struggled, with a year-to-date return of -3.87% compared to the S&P 500's 12.22%, and a one-year return of -18.36% against the S&P 500's 17.14%. This underperformance reinforces the notion that the stock may be overvalued in the current market context.