Prana Biotechnology (NASDAQ: PRAN) and Foundation Medicine (NASDAQ:FMI) are both small-cap medical companies, but which is the better business? We will compare the two companies based on the strength of their risk, institutional ownership, valuation, dividends, analyst recommendations, profitability and earnings.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Prana Biotechnology and Foundation Medicine, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Prana Biotechnology 0 0 0 0 N/A
Foundation Medicine 0 2 2 0 2.50

Foundation Medicine has a consensus price target of $35.00, suggesting a potential downside of 15.46%. Given Foundation Medicine’s higher probable upside, analysts clearly believe Foundation Medicine is more favorable than Prana Biotechnology.

Profitability

This table compares Prana Biotechnology and Foundation Medicine’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Prana Biotechnology N/A N/A N/A
Foundation Medicine -131.79% -109.63% -81.74%

Risk and Volatility

Prana Biotechnology has a beta of -0.13, suggesting that its share price is 113% less volatile than the S&P 500. Comparatively, Foundation Medicine has a beta of -0.12, suggesting that its share price is 112% less volatile than the S&P 500.

Earnings and Valuation

This table compares Prana Biotechnology and Foundation Medicine’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Prana Biotechnology $3.11 million 1.24 -$6.73 million N/A N/A
Foundation Medicine $119.58 million 12.47 -$140.79 million ($4.47) -9.26

Prana Biotechnology has higher revenue, but lower earnings than Foundation Medicine.

Institutional & Insider Ownership

1.8% of Prana Biotechnology shares are held by institutional investors. Comparatively, 31.8% of Foundation Medicine shares are held by institutional investors. 38.8% of Prana Biotechnology shares are held by company insiders. Comparatively, 2.7% of Foundation Medicine shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Summary

Foundation Medicine beats Prana Biotechnology on 6 of the 11 factors compared between the two stocks.

About Prana Biotechnology

Prana Biotechnology Limited is a development-stage medical biotechnology company. The Company is engaged in the research and development of therapeutic drugs designed to treat the underlying cause of degeneration of the brain focusing on Alzheimer’s disease, Huntington disease, Parkinson’s disease and other neurological disorders. The Company’s lead product candidates are PBT2 and PBT434. The Company’s lead drug candidate PBT2 is being developed for the treatment of Alzheimer’s and Huntington’s diseases. The Company also has advanced a drug candidate for Parkinson’s disease and other movement disorders (PBT434) and brain cancer (PBT519), which are in pre-clinical toxicology testing. Its other applications for its therapies include certain cancers, age-related macular degeneration, Motor Neuron disease, Creutzfeldt-Jakob disease (the human variant of Mad Cow disease), and a range of orphan neurodegenerative disorders.

About Foundation Medicine

Foundation Medicine, Inc. is a molecular information company. The Company sells products that are enabled by its molecular information platform to physicians and biopharmaceutical companies. It is engaged in the business of delivering molecular information about cancer to its customers. Its platform includes various methods and algorithms for analyzing specimens across various types of cancer. Its suite of clinical molecular information products includes FoundationOne, which is used for solid tumors; FoundationOne Heme, which is used for blood-based cancers or hematologic malignancies, including leukemia, lymphoma, myeloma, pediatric cancers and advanced sarcoma; FoundationACT (Assay for Circulating Tumor DNA), which is a blood-based (liquid biopsy) assay that evaluates circulating tumor deoxyribonucleic acid (ctDNA), and FoundationFocus CDxBRCA, which is a companion diagnostic assay to aid in identifying women with ovarian cancer for whom treatment with Rubraca (rucaparib).

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