Shares of Vertex Pharmaceuticals Inc. fell Tuesday after a Wedbush Securities analyst issued a downgrade, citing valuation and limited upcoming catalysts.
The stock fell $1.50, or 3.4 percent, to $42.74 in midday trading. Shares of the Cambridge, Mass., company hit a 52-week high of $44.24 on Monday and traded at a 52-week low of $25.94 in April.
Wedbush analyst Y. Katherine Xu downgraded shares to "Underperform" from "Neutral", but maintained a $45 price target on Tuesday.
"The recent run of the stock to the $44 range leaves limited upside to our price target of $45, and qualifies the stock as an 'Underperform' in our relative rating system," she said, in a note to investors.
Vertex's most advanced product is telaprevir, an experimental hepatitis C drug. Xu is optimistic the drug will reach the market, with sales quickly reaching $1.5 billion after its launch. But, the market has already priced in expectations for strong late-stage study data on the drug. That creates a risk for the stock if the data falls short or potential competitors present stronger data.
A key competitor could be Schering-Plough's boceprevir. Merck & Co. bought Schering-Plough in November.
Meanwhile, the debate on how telaprevir is launched onto the market will continue to pressure the stock, Xu said. That debate includes pricing and marketing strategies.