Insmed (NASDAQ: INSM) and Aerie Pharmaceuticals (NASDAQ:AERI) are both small-cap medical companies, but which is the superior stock? We will contrast the two companies based on the strength of their profitabiliy, dividends, valuation, institutional ownership, analyst recommendations, earnings and risk.

Insider and Institutional Ownership

92.0% of Insmed shares are held by institutional investors. Comparatively, 91.9% of Aerie Pharmaceuticals shares are held by institutional investors. 4.0% of Insmed shares are held by insiders. Comparatively, 9.4% of Aerie Pharmaceuticals shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Earnings and Valuation

This table compares Insmed and Aerie Pharmaceuticals’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Insmed N/A N/A -$173.66 million ($2.90) -5.83
Aerie Pharmaceuticals N/A N/A -$99.15 million ($3.31) -17.02

Aerie Pharmaceuticals is trading at a lower price-to-earnings ratio than Insmed, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Insmed and Aerie Pharmaceuticals’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Insmed N/A -96.79% -71.00%
Aerie Pharmaceuticals N/A -136.01% -47.53%

Analyst Ratings

This is a summary of recent ratings for Insmed and Aerie Pharmaceuticals, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Insmed 0 1 4 0 2.80
Aerie Pharmaceuticals 0 1 11 0 2.92

Insmed currently has a consensus price target of $22.75, indicating a potential upside of 34.46%. Aerie Pharmaceuticals has a consensus price target of $65.67, indicating a potential upside of 16.53%. Given Insmed’s higher possible upside, equities analysts clearly believe Insmed is more favorable than Aerie Pharmaceuticals.

Risk & Volatility

Insmed has a beta of 0.69, suggesting that its share price is 31% less volatile than the S&P 500. Comparatively, Aerie Pharmaceuticals has a beta of 1.16, suggesting that its share price is 16% more volatile than the S&P 500.

Summary

Aerie Pharmaceuticals beats Insmed on 6 of the 10 factors compared between the two stocks.

About Insmed

Insmed Incorporated is a biopharmaceutical company. The Company operates through development and commercialization of therapies for patients with rare diseases segment. Its lead product candidate is ARIKAYCE, or liposomal amikacin for inhalation (LAI), which is in late-stage development for adult patients with treatment refractory nontuberculous mycobacteria (NTM) lung disease caused by Mycobacterium avium complex (MAC). Its earlier-stage pipeline includes preclinical compounds that the Company is evaluating in multiple rare diseases of unmet medical need, including methicillin-resistant staph aureus and NTM. Its earlier clinical-stage pipeline includes INS1007 and INS1009. INS1007 is an oral, reversible inhibitor of dipeptidyl peptidase 1. INS1009 is an inhaled nanoparticle formulation of a treprostinil prodrug that may offer a differentiated product profile for rare pulmonary disorders, including pulmonary arterial hypertension. It has completed a Phase I study of INS1009.

About Aerie Pharmaceuticals

Aerie Pharmaceuticals, Inc. is a clinical-stage pharmaceutical company. The Company is engaged in the discovery, development and commercialization of therapies for the treatment of patients with glaucoma and other diseases of the eye. The Company’s product candidates include Rhopressa (netarsudil ophthalmic solution) 0.02% (Rhopressa), and Roclatan (netarsudil/latanoprost ophthalmic solution) 0.02%/0.005% (Roclatan). The Company’s product candidates are designed to lower intraocular pressure (IOP) in patients with open-angle glaucoma and ocular hypertension. Its Rhopressa is a once-daily eye drop. Rhopressa inhibits Rho kinase (ROCK), and the norepinephrine transporter (NET), which are both biochemical targets for lowering IOP. Its Roclatan is a once-daily, fixed-dose combination of Rhopressa and latanoprost, which is a prescribed drug for the treatment of patients with open-angle glaucoma. The Company is engaged in conducting Phase III clinical trial for Roclatan.

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