The Medicines (NASDAQ: MDCO) and Depomed (NASDAQ:DEPO) are both medical companies, but which is the superior stock? We will compare the two businesses based on the strength of their analyst recommendations, earnings, dividends, institutional ownership, valuation, risk and profitabiliy.

Valuation and Earnings

This table compares The Medicines and Depomed’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
The Medicines $141.74 million 19.79 -$306.00 million ($1.90) -20.77
Depomed $441.56 million 1.50 $125.09 million ($1.53) -6.93

Depomed has higher revenue and earnings than The Medicines. The Medicines is trading at a lower price-to-earnings ratio than Depomed, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

The Medicines has a beta of 0.86, meaning that its stock price is 14% less volatile than the S&P 500. Comparatively, Depomed has a beta of 1.15, meaning that its stock price is 15% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for The Medicines and Depomed, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
The Medicines 0 2 8 0 2.80
Depomed 0 4 4 0 2.50

The Medicines currently has a consensus target price of $54.80, indicating a potential upside of 38.84%. Depomed has a consensus target price of $17.00, indicating a potential upside of 60.38%. Given Depomed’s higher probable upside, analysts clearly believe Depomed is more favorable than The Medicines.

Insider and Institutional Ownership

92.4% of Depomed shares are owned by institutional investors. 7.9% of The Medicines shares are owned by company insiders. Comparatively, 5.1% of Depomed shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Profitability

This table compares The Medicines and Depomed’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
The Medicines -91.25% -19.09% -7.60%
Depomed -21.41% -25.33% -5.52%

Summary

Depomed beats The Medicines on 8 of the 13 factors compared between the two stocks.

The Medicines Company Profile

The Medicines Company is a global biopharmaceutical company. The Company is focused on advancing the treatment of acute and intensive care patients through the delivery of medicines to the hospital marketplace around the world. It markets Angiomax (bivalirudin), Ionsys (fentanyl iontophoretic transdermal system), Minocin (minocycline) for injection and Orbactiv (oritavancin). It also has a pipeline of products in development, including Carbavance, inclisiran and MDCO-700. Carbavance is used for the treatment of hospitalized patients with gram-negative bacterial infections. Inclisiran is used for the treatment of hypercholesterolemia. MDCO-700 includes sedative-hypnotic, which is used to induce and maintain sedation for procedural care and general anesthesia for surgical care. In addition to these products and products in development, it has a portfolio of generic drugs.

Depomed Company Profile

Depomed, Inc. is a specialty pharmaceutical company. The Company focuses on pain and other central nervous system (CNS) conditions. Its products include NUCYNTA ER (tapentadol extended release tablets), NUCYNTA IR (NUCYNTA) (tapentadol), Gralise (gabapentin), CAMBIA (diclofenac potassium for oral solution), Zipsor (diclofenac potassium) and Lazanda (fentanyl). Its NUCYNTA ER (tapentadol extended release tablets) is a product for the management of pain severe enough to require daily long term opioid treatment, including neuropathic pain associated with diabetic peripheral neuropathy in adults, and its NUCYNTA (tapentadol) is a product for the management of moderate to severe acute pain in adults. Its Gralise (gabapentin) is a once-daily product for the management of postherpetic neuralgia. Its CAMBIA (diclofenac potassium for oral solution) is a product for the acute treatment of migraine attacks.

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