Recro Pharma (NASDAQ: REPH) and Intercept Pharmaceuticals (NASDAQ:ICPT) are both small-cap medical companies, but which is the superior business? We will compare the two companies based on the strength of their risk, analyst recommendations, valuation, profitability, dividends, earnings and institutional ownership.

Analyst Ratings

This is a summary of recent recommendations and price targets for Recro Pharma and Intercept Pharmaceuticals, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Recro Pharma 0 1 4 0 2.80
Intercept Pharmaceuticals 3 9 7 0 2.21

Recro Pharma currently has a consensus target price of $13.50, suggesting a potential upside of 49.83%. Intercept Pharmaceuticals has a consensus target price of $153.85, suggesting a potential upside of 131.25%. Given Intercept Pharmaceuticals’ higher probable upside, analysts plainly believe Intercept Pharmaceuticals is more favorable than Recro Pharma.

Risk and Volatility

Recro Pharma has a beta of -0.53, meaning that its share price is 153% less volatile than the S&P 500. Comparatively, Intercept Pharmaceuticals has a beta of -2.1, meaning that its share price is 310% less volatile than the S&P 500.

Profitability

This table compares Recro Pharma and Intercept Pharmaceuticals’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Recro Pharma -46.75% -56.04% -19.40%
Intercept Pharmaceuticals -543.35% -135.24% -54.37%

Earnings and Valuation

This table compares Recro Pharma and Intercept Pharmaceuticals’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Recro Pharma $69.99 million 2.45 -$13.04 million ($2.21) -4.08
Intercept Pharmaceuticals $70.92 million 23.55 -$361.26 million ($15.50) -4.29

Recro Pharma has higher revenue, but lower earnings than Intercept Pharmaceuticals. Intercept Pharmaceuticals is trading at a lower price-to-earnings ratio than Recro Pharma, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

65.1% of Recro Pharma shares are held by institutional investors. Comparatively, 82.2% of Intercept Pharmaceuticals shares are held by institutional investors. 21.6% of Recro Pharma shares are held by insiders. Comparatively, 9.2% of Intercept Pharmaceuticals shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Summary

Recro Pharma beats Intercept Pharmaceuticals on 8 of the 13 factors compared between the two stocks.

About Recro Pharma

Recro Pharma, Inc. is a clinical-stage specialty pharmaceutical company. The Company is engaged in developing products for hospitals and ambulatory care settings that is developing non-opioid products for treatment of serious acute pain. The Company’s lead product candidate is an injectable form of meloxicam. Its product candidates for pain indications include injectable meloxicam, a product candidate in development for the treatment of acute post-operative pain; Dex-IN, a product candidate under development for the treatment of post-operative pain; Dex-SL, a product candidate for the treatment of chronic pain, and Fadolmidine (Fado), a product candidate used by injection into the spine for pain associated with surgery or certain types of chronic pain and which the Company pursues as a topical product for local application to treat serious pain associated with nerve damage to local tissues (neuropathies), especially of the lower extremities, which can occur in diabetic patients.

About Intercept Pharmaceuticals

Intercept Pharmaceuticals, Inc. is a biopharmaceutical company. The Company is focused on the development and commercialization of therapeutics to treat non-viral, progressive liver diseases. The Company’s product candidates have the potential to treat orphan and more prevalent diseases for which there are limited therapeutic solutions. The Company’s product candidate, obeticholic acid (OCA), is a bile acid analog, a chemical substance that has a structure based on a naturally occurring human bile acid that selectively binds to and activates the farnesoid X receptor (FXR). In addition to OCA, it is developing other bile acid analog compounds targeting FXR and a second dedicated bile acid receptor called TGR5, which is a target of interest for the treatment of type 2 diabetes and other gastrointestinal indications. The Company is also developing other products INT-767 for the treatment of fibrosis and INT-777 for the treatment of type 2 diabetes.

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